Australian Stock Market Report – Afternoon 1/17/2012

AFTERNOON REPORT
(5.30pm AEDT)

The local share market enjoyed a strong session today, with investor sentiment boosted by a positive offshore lead, better than expected Chinese economic data and strong quarterly production reports from a number of our key mining and energy companies. The All Ordinaries Index (XAO) added 68.8pts by close or 1.6pct to 4277.7 while the S&P/ASX 200 Index (XJO) firmed by 68.4pts or 1.7pct to 4215.6.

Wall Street was closed overnight for Martin Luther King Day, however European investors generally shrugged off last week's downgrade of several Eurozone nations, while Canadian investors snapped up energy and mining stocks in response to firmer commodity prices.

Around 1pm Eastern, a raft of Chinese data was released and was generally firmer than expected. The Chinese economy grew at an 8.9pct annual rate in the December quarter (consensus 8.7pct) down from 9.1pct in the previous quarter. It was the slowest annual growth rate in 2½ years. Retail sales in December were up 18.1pct on a year ago (consensus 17.2pct); industrial production was up 12.8pct (consensus 12.2pct); but fixed asset investment over 2011 was up by 23.8pct (consensus 24.1pct).

"The solid, sustainable rate of economic growth in China is clearly a good outcome for Australian raw material suppliers," said CommSec Chief Economist Craig James. "The Aussie dollar held near US103.5 cents after the results."

Every sector on our market finished stronger. Fortescue Metals Group (FMG) shot up 3.9pct to $4.80 while Rio Tinto (RIO) gained 1.3pct to $65.70 with both companies reporting record quarterly iron ore production.

In the energy space, uranium producer Paladin (PDN) gained 11.8pct to $1.71 after announcing a 47pct lift in December quarter output.

Also today, lending finance figures for November were released, showing total lending slumped 6.4pct in the month, despite the rate cut. Most components recorded weaker readings with the exception of housing and lease finance. Housing finance rose by 2.2pct in November, driven by loans to purchase established dwellings (up 4.2pct and marking the biggest monthly increase in 26 months). Commercial finance fell by 9.6pct while personal finance fell 7.8pct in November, effectively giving back the prior months gains.

The Australian dollar received a boost on today's Chinese data and at 5.30pm AEDT was buying US103.91c, £0.676 and €81.64c.

On the market overall, a total of 1.6 billion shares were traded, worth $3.7 billion. 677 were up, 264 were down and 384 were unchanged.

At 5.30pm AEDT on the ASX24, the Sydney futures contract was up 5pts at 4191.

Ahead tonight, CitiGroup reports fourth quarterly earnings before the opening bell on Wall Street.

Juliette Saly, CommSec Market Analyst

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