Australian Stock Market Report – Afternoon 12/24/2012

MARKET CLOSE
(3.45pm AEDT)

The Australian sharemarket continued on its strong run to improve for the 10th time in 12 sessions and is still trading around 18-month highs. The All Ordinaries Index (XAO) edged higher by 0.2 per cent or 10.4 pts to 4645.6. All sectors managed to rise modestly, with the utilities the biggest improvers in percentage terms. The local market will be closed on both Tuesday and Wednesday.

History was on our side, with local shares rising 80 per cent of the time on Christmas Eve. The Japanese, Indonesian and Philippine sharemarkets were closed for holidays while markets in Hong Kong and Singapore shut their doors earlier than usual. Numerous European markets will not trade normal hours tonight, including markets in Austria, the Czech Republic, Greece, Hungary, Iceland, Italy and Norway. The British and American markets will be trading shorter hours tonight also.

The miners rose modestly, with the S&P/ASX 200 Materials index rising 0.25 per cent or 26 pts to 10508.9. BHP Billiton (BHP) gained by 0.44 per cent or 16 cents to $36.86 while the smaller Rio Tinto (RIO) rose by just 0.15 per cent or 10 cents to $64.84.

The S&P/ASX 200 Energy index jumped by 0.18 per cent or 22.6 pts to 12351.4. Oil and gas producer Santos (STO) rose 0.55 per cent or 6 cents to $10.96 while the larger Woodside Petroleum (WPL) rose by 0.18 per cent or 6 cents to $33.81.

The major banks ended mixed, with Commonwealth Bank of Australia (CBA) the standout after rising by 0.53 per cent or 33 cents to $62.33, while ANZ Banking Group (ANZ) also rose by 0.08 per cent or 2 cents to $24.97. Westpac (WBC) finished flat at $26.17 and National Australia Bank (NAB) eased by just 0.24 per cent or 6 cents to $24.88.

Surfwear retailer Billabong (BBG) rose by 0.61 per cent or 0.5 cent to 83 cents, however is still down by around 40 per cent this calendar year. Last week, BBG received a $527 million offer from a consortium led by the former head of its Americas division. Today, BBG's board said it reviewed the offer in detail and the consortium is expected to take around six weeks to conduct its due diligence. Investors haven't been overly optimistic with the takeover offer as BBG shares slumped by over 11.5 per cent last week.

Traditionally the Christmas week is an extremely quiet time for markets and the next five days are unlikely to be any different. No major economic news is due for release locally while the region is just as quiet with the exception of numerous economic reports in Japan on Friday. This will include inflation, household spending, industrial production, retail sales and unemployment data. The main potential catalyst for markets will be the U.S fiscal cliff negotiations which seem to be stagnating. The market fears automatic spending cuts and tax increases which could be triggered at the start of 2013 if no agreement is reached.

No major data is due for release in Europe while economic news will be light in the U.S also. Looking ahead, on Thursday night, new home sales, consumer confidence and unemployment claims will be issued in the U.S. On Friday night, pending home sales and crude oil inventories will be released in North American while French consumer spending and a 10-year Italian bond auction takes place on Friday in the Eurozone.

Volume of shares traded came in at 615 million today, worth just $955 million, making it around four times as quiet as a typical trading day in Australia. 417 shares were up, 377 were weaker and 314 ended unchanged.

At 4.30pm (AEDT) on the Sydney Futures Exchange, the ASX24 futures contract is up 0.46 per cent or 21 pts to 4613.

Due to the end of daylight savings in Europe, most major European markets are now trading between 7pm (AEDT) and 3.30am (AEDT). Futures are currently pointing to a mixed start to trade tonight.

U.S futures are also pointing to a slightly weaker open tonight. Due to the start of daylight savings in Australia and its end in the U.S, American markets will now be trading between 1.30am (AEDT) and 8am (AEDT).

Turning to currencies, the Australian dollar (AUD) has lost ground against a basket of currencies. One AUD buys US104 cents, is trading at £64.3 pence and €78.9 cents.

Australia is a commodity based economy, with commodities in general accounting for almost 80 pct of all our exports over the past nine months. In essence, when the going gets tough globally, there is fear of less demand for our commodities, which tends to result in a weaker AUD.

The team at CommSec wishes you a very Merry Christmas! We'll be back on Thursday when the Australian market resumes trade.

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