Australian Stock Market Report - Afternoon 12/21/2011

AFTERNOON REPORT (4.30pm AEDT)

The long-awaited Christmas rally finally came true for investors today, who were willing to buy equities following a strong showing on offshore markets in the wake of positive economic data out of both the US and Germany. All sectors on the local share market recorded growth, with the All Ordinaries Index (XAO) firmer by 83pts or 2pct to 4190.

Every sector recorded growth with the S&P/ASX 200 Financials sector firmer by 2pct. Shares in Macquarie Group (MQG) added 3pct to $24.09 on a report the company is contemplating focusing on investment banking and selling its biggest business, that of retail lending.

Retail stocks enjoyed a much needed comeback, after a disastrous few days trade due to profit downgrades from surf-wear retailer Billabong (BBG) and discount seller JB Hi-Fi (JBH). Shares in BBG rose 10pct to $1.95 while JBH gained 1pct to $12.12. Harvey Norman (HVN) boss and co-founder Gerry Harvey bought a substantial holding in his own company, for the first time in 10 years. Director interest and substantial shareholding statements issued to the Australian Securities Exchange this morning showed Mr Harvey bought 550,000 ordinary shares in Harvey Norman, shelling out $1.002 million for the parcel of shares. HVN shares added 3.6pct today to $1.88.

Hearing implant maker Cochlear (COH) came off slightly, down 2pct to $63. Health stocks are often losers on strong days like today as they hold up defensively in times of weakness. However COH rose 16.5pct yesterday so today's pullback was hardly significant. The strong Australian dollar was also a reason behind today's fall as COH is heavily exposed to the US market.

The Australian dollar received a boost with investors more willing to take on risk. A lack of local economic data to move the currency markets saw the Aussie dollar remain strong and it ended the session at US101.48c. It was also buying £0.6457 and €77.39c.

On the market overall, a total of 1.7 billion shares were traded, worth $4 billion. 694 were up, 291 were down and 357 were unchanged.

At 4.30pm AEDT on the ASX24, the futures contract was at 4110, up 71pts.

Ahead tonight, existing home sales are released in the US.

Juliette Saly, CommSec Analyst

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