MARKET CLOSE (4.30pm AEDT)

The Australian sharemarket managed to end higher for the third time this week, with the All Ordinaries index (XAO) rising 0.4 pct or 17 pts to 4255.4. This is the third time this week that shares locally improved, something which has not happened in well over a month. The XAO rose by 2.1 pct over the week adding to last week's 1.3 pct improvement.

The consumer staples, utilities and insurance companies lost some ground, however almost all other sectors finished the session higher. QBE Insurance (QBE) was one of the worst performers over the week, with shares falling 12.7 pct yesterday and another 3 pct today. This comes after the insurer announced an expected 40 to 50 pct fall in profit last year compared to earnings in 2010. The barrage of natural disasters is partly to blame. QBE also announced that it will cut its final dividend by 41 cents a share in also received a broker downgrade today. Insurance Australia Group (IAG) managed to end higher over the week despite estimating that the cost from the Christmas Day storms in Melbourne could reach as much as $200 million.

The S&P/ASX 200 Financials index rose 0.33 pct or 13.3 pts to 4000.2 today with all the major banks gaining a little ground. Unions today said that ANZ Banking Group (ANZ) is expected to cut 100's of jobs over the next six months to reduce costs. The banks also kept its variable rates steady. This is part of ANZ's plan to no longer announce changes to rates immediately following the Reserve Bank of Australia's (RBA) monthly rates decision.

Commodity prices rose last night and the U.S dollar (USD) lost some ground. The miners ended mostly higher with Australia's two largest resource companies ending the day in the black. BHP Billiton (BHP) rose 0.63 pct or 23 cents to $36.60 while the smaller RIO Tinto (RIO) gained 0.74 pct or 48 cents to $65.21. Australia's largest gold producer, Newcrest Mining (NCM) fell by around 0.5 pct.

One of the country's biggest uranium miners, Paladin Energy (PDN) gained by 3 pct today, taking the weekly improvement to around 10 pct following a broker upgrade a few days ago.

Last night in the U.S, a number of economic reports were issued which mostly disappointed the market slightly. Retail sales in December (the change in sales at the retail level) increased by a worse than expected 0.1 pct over the month. Sales of electronic goods and appliances slumped by 3.9 pct while department store sales also remained weak. The U.K's largest supermarket chain, Tesco missed sales expectations over the Christmas period and fell 13 pct as a result in London trade. This was the company's biggest drop in its share price in a number of years. Tesco has slumped by 18 pct in 2012, employees close to 500,000 people and has over 5000 stores.

Both the number of Americans applying for unemployment benefits for the first time last week in addition to the U.S Federal Budget balance (the difference between government spending and revenue) were worse than expected.

Tonight in the U.S, the latest trade balance (the difference between exports and imports) will be released. A deficit of around US$44.6 billion is expected for the previous month. Global banking giant, JP Morgan Chase will be posting its fourth quarter profit results tonight which will set the tone for the other large U.S banks.

In Europe last night, both the British and European central banks kept interest rates unchanged at 0.5 pct and 1 pct respectively as expected. Both the Italian and Spanish government raised more funds than expected overnight and at lower borrowing costs via the bond market. Germany's inflation reading also slowed more than expected to 2.3 pct.

Tonight, the U.K's latest input and output data will be released along with the British trade balance at around 9pm (AEDT).

In Asia yesterday, China's inflation reading came in at a slightly higher than expected 4.1 pct. The more inflation falls, the more comfortable the Chinese authorities will be to stimulate the Chinese economy. Indonesia's central bank decided to keep interest rates on hold at 6 pct.

There was no major economic data released in the region today.

Next week will be a relatively busy day on the economic front with the latest inflation reading, housing and lending finance numbers, a report on car sales, consumer confidence and the latest employment statistics all released in Australia.

It will be the busiest week of the month for economic data out of China next week also, with GDP, production, retail sales and home prices all issued.

The volume of shares traded came in at 1.31 billion today, worth $3.4 billion. 568 shares were up, 352 finished weaker and 357 ended unchanged.
At 4.30pm AEDT on the Sydney Futures Exchange, the ASX24 futures contract is up 0.67 pct or 28 pts to 4180.

Due to daylight savings, most major European markets are now trading between 7pm (AEDT) and 3.30am (AEDT). Futures in Europe are pointing to a weaker start to trade tonight.

Dow Futures are currently trading higher, indicating that U.S stocks are expected to kick off trade tonight in the black. American markets open at 1.30am (AEDT). Due to the Americans going back an hour on November 5 last year, U.S markets will be trading between 1.30am (AEDT) and 8am (AEDT).

Turning to currencies, the Australian dollar (AUD) buys US103.3 cents and €80.44 cents.

Steven Daghlian, CommSec Market Analyst

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e�ia 6 ;rif; font-size: 13px; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: 17px; orphans: 2; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px; ">In Asia yesterday, China's inflation reading came in at a slightly higher than expected 4.1 pct. The more inflation falls, the more comfortable the Chinese authorities will be to stimulate the Chinese economy. Indonesia's central bank decided to keep interest rates on hold at 6 pct.

There was no major economic data released in the region today.

Next week will be a relatively busy day on the economic front with the latest inflation reading, housing and lending finance numbers, a report on car sales, consumer confidence and the latest employment statistics all released in Australia.

It will be the busiest week of the month for economic data out of China next week also, with GDP, production, retail sales and home prices all issued.

The volume of shares traded came in at 1.31 billion today, worth $3.4 billion. 568 shares were up, 352 finished weaker and 357 ended unchanged.
At 4.30pm AEDT on the Sydney Futures Exchange, the ASX24 futures contract is up 0.67 pct or 28 pts to 4180.

Due to daylight savings, most major European markets are now trading between 7pm (AEDT) and 3.30am (AEDT). Futures in Europe are pointing to a weaker start to trade tonight.

Dow Futures are currently trading higher, indicating that U.S stocks are expected to kick off trade tonight in the black. American markets open at 1.30am (AEDT). Due to the Americans going back an hour on November 5 last year, U.S markets will be trading between 1.30am (AEDT) and 8am (AEDT).

Turning to currencies, the Australian dollar (AUD) buys US103.3 cents and €80.44 cents.