Australian Stock Market Report – Afternoon 1/22/14

EVENING REPORT
(5pm AEDT)

The Australian share market closed in the red today but managed to rally off earlier lows thanks to gains from financial stocks.

After being as low as 5298 points, the All Ordinaries Index (XAO) finished the session down just 10 points or 0.2 per cent to 5331.3 points.

Similar to yesterday's trade, investors switched into financial stocks with Macquarie Group (MQG) a stand-out, rising by two per cent.

Material stocks continued to come under pressure, in part due to a weaker iron ore price and also as BHP Billiton (BHP) came in with production numbers that were a little below forecasts. BHP shares closed down 0.8 per cent to $37.63. Total petroleum production was down four per cent in the second quarter, while iron ore output rose 16 per cent and copper output was up six per cent.

Elsewhere the ongoing battle for Warrnambool Cheese and Butter Factory (WCB) looks like it is close to ending. Canadian firm Saputo now olds 52.702 per cent of WCB with remaining suitor Murray-Goulburn holding on to a 17.7 per cent stake. Saputo has increased its offer to $9.20 per shares with WCB closing higher by 1.2 per cent to $9.42.

In economic news, the Consumer Price Index, the main measure of inflation in Australia, rose by 0.8 per cent in the December quarter, above expectations for a lift of around 0.4 per cent. In seasonally adjusted terms the CPI rose by 0.9 per cent. The CPI stands 2.7 per cent higher than a year ago.

CommSec believes the latest data closes the door on any further rate cuts. Financial markets see just a 3 per cent chance of a rate cut in February. The Aussie dollar lifted almost a cent to hold near US88.66 cents.

The Westpac/Melbourne Institute index of consumer confidence fell by 1.7 per cent to a 6-month low of 103.3 points in January.

[Kick off your trading day with our newsletter]