Australian Stock Market Report – Afternoon 12/19/2012

AFTERNOON REPORT
(5pm AEDT)

The local share market rallied again today, with both the All Ordinaries Index (XAO) and S&P/ASX 200 Index (XJO) reaching 2012 and 17 month highs.

Investors were encouraged by hopes US Congress will soon reach a deal to avert the so-called "Fiscal Cliff" with US House majority leader Cantor saying he expected to have enough Republican votes to pass the bill.

Miners continued their recent good run, supported by a stronger iron ore price. BHP Billiton (BHP) added 1.1pct to $37.06 while Rio Tinto (RIO) was up 1.6pct to $65.71 and Fortescue Metals Group (FMG) gained 1.3pct to $4.66.

A slump in the gold price hurt gold players, with Newcrest Mining (NCM) down 3.1pct to $22.56. The price of gold is now trading at its lowest level since August, worth US$1672 an ounce.

Surfwear retailer Billabong (BBG) saw its share price dive after coming out of a trading halt. Billabong's fifth takeover of the year could be at risk of being withdrawn after details of the proposal were leaked to the media while BBG also downgraded its full year earnings guidance today. Former board member and pro-surfer Paul Naude is believed to have offered $1.10 per BBG share, valuing the surf-wear retailer at $527M, but may pull the plug on the deal. Meanwhile, weaker than expected sales in October and November have forced BBG to downgrade its profit forecast from $85-92 million from a previous forecast of $100-110 million. BBG shares today fell 13.3pct to 85c. BBG shares are down almost 40% on the year, fell 78% in 2011 and 25% in 2010.

Whitehaven Coal (WHC) soared after confirming it has held talks with China's largest coal company Shenhua Group, in response to speculation Shenhua wanted to buy Whitehaven's Watermark coal assets in return for equity. WHC claims it routinely holds talks with other coal companies about potential business developments but no offer has been made from the Chinese firm. WHC today rose by 8.1pct to $3.47.

The Aussie dollar lost a little ground today as investors await China's projected growth numbers for the next five years and amid growing speculation of further rate cuts by the RBA. The AUD ended today's session at US105.17c, £0.6468 and €79.39c.

On the market overall, a total of 1.79 billion shares were traded, worth $4.86 billion. 493 were up, 420 were down and 375 were unchanged.

At 5pm AEDT the SFE 200 Futures market was at 4626, up 24pts.

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