Australian Stock Market Report – Afternoon 11/27/2012

Afternoon Market Report

A more constructive tone was in place for local stocks on Tuesday, reflecting the general atmospherics for regional indices. Most stock indices throughout the region ended higher. The Shanghai index was conspicuous for its weaker finish, ending below the 2000 mark.Market participants remain wary of the technical picture around the Chinese index and the difficulty it's having consolidating at an important support level.

An announcement was made in the early afternoon that the provision of Greek bailout funds had been resolved by European officials. Whilst many column inches have been devoted to the subject and its resolution, the underlying sense in the markets was that ultimately Euro politicians would find common ground on the matter. The outcome helped lighten the atmosphere in the market with an important political box being ticked where Europe is concerned.

The S&P/ASX200 index rose 0.7% or 32 points to 4456, while the All Ordinaries index rose 0.7 per cent or 30 points to 4473.4 points.1.5 billion shares were traded, valued at $4.2 billion. 483 stocks closed higher,442 were lower and 360 were unchanged.

The recent discussion about overpriced defensive stocks, healthcare in particular, was thrown out today. 3 months ago blood products group CSL (CSL) forecast that after tax profit would increase 12% in 2011/12. Today CSL upgraded that forecast saying that due to a better performance from its US subsidiary CSL Behring, CSL´s profit would rise by 20%. CSL shares closed at $50.01 up $3.23 or 6.90%. Most other stocks in the health sub index also moved ahead. Ansell (ANN) closed at $15.06 up 6 cents or 0.4%, Resmed (RMD) ended at $3.88 up 5 cents or 1.3%, Cochlear (COH) settled at $74.94 up 78 cents or 1%, Ramsay Healthcare finished at $26.07 up 76 cents or 3%.

Investor risk aversion having faded somewhat in the last day has seen gold prices improve. The case for high commodity prices in general has improved as a result of the European resolution on Greek debt. Fortescue (FMG) closed at $3.85 up 5 cents or 1.3%, BHP Billiton (BHP) ended at $34.20 up 19 cents or 0.6%, Rio Tinto (RIO) settled at $57.78 a gain of 57 cents or 1%, Newcrest (NCM) ended at $25.80 up 5 cents or 0.19%, Kingsgate Consolidated last trade at $4.88 up 14 cents or 3%.

In Europe tonight second estimates of third quarter UK GDP will provide some clarity on the breakdown of growth. Consumer spending will have benefited from the London Olympics. National Statistics estimates that Olympic ticket sales added 0.2%pts to QIII GDP growth. Spending on accommodation, transport and food and drink are also likely to have been boosted. Whilst revisions aren't expected, any movement is likely to be towards a softer reading.

Later in the US session, durable goods orders and Conference Board consumer confidence will provide the latest evidence on the state of the US economy. But progress on the fiscal cliff is what markets really want to see.

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