Australian Stock Market Report – Afternoon 1/14/2013

Afternoon Market Report.
(17:00)

Local stocks edged higher in a session that delivered few insights, although the overarching tone for markets appears reasonably constructive. At face value it appears as though the main risk would be skewed towards investors being underweight (local) stocks as prices grind higher. This view will be put to the test later in the week with several key data releases locally and elsewhere, in addition to the 2nd week of the US reporting season and a Bernanke speech, all of which could have a durable impact on investor sentiment.

The local market ended higher due to gains across most sectors, although volumes remained light.

The ASX200 index rose 10 points, or 0.22 % to end at 4,719, The All Ordinaries index gained 11 points, or 0.25% to 4,745. Turnover was 1.325 billion shares worth $2.268 billion, with 548 stocks up, 419 down and 377 unchanged.

The tone of local trade was boosted by gains for Chinese stocks. The Shanghai bourse gained more than 2% despite higher than expected inflation numbers at the weekend. Chinese consumer prices rose 2.5pct in the year to December, up from 2.0pct in November, but driven up by higher food prices.
Mining leaders had a mixed day. Rio Tinto gained 19 cents to $65.99 BHP Billiton fell 11 cents to $36.57, and Fortescue was flat at $4.73. Over the last week metals were mixed with tin up 4.7pct while lead lost 1.4pct. The gold price fell in line with other commodities as traders booked profits with the Comex gold futures down by $17.40 or 1.0pct to US$1,660.60 per ounce. Gold rose US$11.70 or 0.7pct over the week. And the spot iron ore price fell by US$3.30 to US$154.90 a tonne but rose US$1.60 over the week.

Similarly banks saw mixed fortunes. ANZ eased by 4 cents to $25.21, Westpac fell 8 cents to $26.50, Commonwealth Bank gained 25 cents to $61.63 & National Australia Bank gained 17 cents to $25.74. Figures from the Australian Bureau of Statistics showed a 0.5% fall in the number of home loans in November, which was weaker than market expectations which were on a small rise of 0.3%. The proportion of home loans to first-time buyers has fallen to its lowest level in more than eight years as government subsidies dry up. The proportion of first home buyers in the market fell from 18.7 per cent to an 8½-year low of 15.8 per cent in November. Fixed rate loans rose from 13.5 per cent of all loans to 14.3 per cent in November. And the average home loan across Australia stood at $306,700, up 2.2 per cent on a year ago. The main take out from lending figures continues to be the conservative approach households are taking to new debt. This is reflected in the national household savings rate which is still near 10%, the highest since the early 1980s.

Elsewhere, job advertisements were at their lowest levels for three years after falling for the 10th straight month in December, according to the monthly ANZ figures. The combined number of internet and newspaper job advertisements, as tracked by ANZ, fell for the 10th straight month, dropping by 3.8 per cent in December after a 2.8 per cent decline in November. Job ads are down 16.1 per cent on a year ago to 133,352 and are holding at the lowest levels since January 2010. Newspaper job ads fell by 0.4 per cent in December while the far larger component of internet job ads fell by 3.9 per cent.

Shares in steelmaker BlueScope Steel rose 1 cent to $3.71. The group announced it would cut 170 jobs in Victoria as continues to cut costs. BlueScope will reduce cold rolling, metal coated and painted steel output at its Western Port processing plant from the middle of March. The cut about 1,400 jobs last financial year.

In Europe the main economic release of note to start the week will be Eurozone industrial production numbers for November. A modest bounce is expected.

The rest of the week will be dominated by US newsflow, both on the economy and also from corporate earnings season which steps up a gear. Perhaps key interest in terms of earnings will come from US banks this week.

On the economy top tier releases covering advance retail sales, Empire and Philly Fed surveys, industrial production, CPI and housing starts are all slated for release.

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