Australian Stock Market Report - Afternoon 12/30/2011

END OF DAY REPORT (2.30pm AEDT)

Yesterday, The Australian Stock market closed 19points lower. But today, after a negative week of trading, the market turned higher at the open up 10points, boosted by strong gains on overseas markets.

European markets closed higher helped by strong interest for the Italian government's long dated bond auctions. The government raised nearly 7 billion Euros ($9 billion). A good step forward for Italy but the dramas are still far from over.

U.S. markets also stronger the DOW Jones Industrial Index ending over 100 points higher and the tech heavy NASDAQ up nearly 1pct, in a very quiet night of trading. Better than expected pending home sales and monthly jobless claims, number of people who signed up for unemployment benefits in the last month, coming in at a 3 and a half year low. Overnight's November jobless claims report was more evidence that the US job market is improving.

The All Ordinaries Index (XAO) gave back early gains to finish the 2012 calendar off 12 points or 0.29pct to 4,111 points or a 14.5pct loss over the year. The Australian market closed early for the New Years break at 2pm (AEDT) with the last deals and crossings concluded by 2.15pm.

The S&P/ASX 200 Materials index is being held back early in trade. Large investors not willing to buy into mining stocks ahead of today's HSBC Chinese manufacturing data for December. The manufacturing data showed that Chinese businesses are still growing but just not with the same speed and production levels as last year. The HSBC Purchasing Managers Index (PMI) rose by 10 index points to 48.7. The materials index off 0.16 pct. Last night Base metal prices were mixed on the London Metals Exchange (LME). Lead metals aluminium and copper did close lower but the minor metals climbed between 1-2pct. RIO Tinto (RIO) share prices closed the day flat at $60.30 while BHP Billiton (BHP) dropped 0.23 pct or 8 cents to $34.42. OZ Minerals Limited (OZL) shares off another 1pct or 10 cents to $10.01.

The gold price fell for the sixth straight session overnight to a five month low of US$1,540.90 an ounce off US$23.20 or 1.5pct. Newcrest Mining Limited (NCM), Australia's largest listed gold miner, off 0.80 pct to $29.60. St Barbara Limited (SBM) added 0.5 pct to $1.94 and AngloGold Ashanti Limited (AGG) finished unchanged at $8.37.

The S&P/ASX 200 Consumer Discretionary sector (discretionary retailers) did a little better today, ending 0.6pct higher. Department store owner Myer (MYR) flat at $1.93 and a half cents and rival David Jones (DJS) is down 0.42 pct or 1 cents to $2.37. Other companies in the retail space are mixed today Pacific Brands Limited (PBG) ended 0.9pct higher to 55 cents a share while online accommodation, activity and flight booking services company, Wotif.com Holdings Limited(WTF) closed 0.83 pct lower to $3.57.

Media sub sector performed well helped by at 1.64 pct lift in News Corporation (NWS) shares and Crown Limited (CWN) adding 0.75pct or 6 cents to $8.09.

The S&P/ASX 200 Financials index closed 0.56pct lower. The four major banks all lower with Westpac (WBC) listing the biggest slide off 0.74 pct or 4 cents to $20.00. National Australia Bank (NAB) off 0.68 pct, Commonwealth Bank of Australia (CBA) off another 0.2pct to $49.22.

The oil price gained over night as many analysts are now expecting demand for energy products to increase in 2012. The S&P/ASX 200 Energy Index dropped 0.55pct, Woodside Petroleum Limited (WPL) off 1.19pct to $30.62 and Santos Limited (STO) off 0.65pct or 8 cents to $12.24.

Telstra Corporation Limited (TLS) off 1 cent to $3.33 and Qantas Airlines (QAN) flat at $1.46.

In economic news - The RP Data-Rismark November Hedonic Capital city Home Value Index listed a 0.1 pct increase in seasonally-adjusted terms. The small lift in November was the first increase since December 2010. Regional house values listed a slightly bigger gain than capital cities up 0.3 pct in November.

"It appears that the November rate cut has already worked its magic in the housing market, leading to the first lift in dwelling prices in almost a year. Prior to the rate cuts in November and December, supply and demand in the housing market was reasonably balanced, translating to a softening of home prices. But the rate cuts will serve to lift demand for homes and drive property prices higher over 2012. CommSec expects Australian property prices to grow around 5 per cent in 2012, but as always there will be major deviations from city to city and across regional areas." Craig James - CommSec Chief Economist.

The Reserve bank of Australia's (RBA) Credit data for November was released today, it showed total credit rose by 0.3% to be 3.5% higher than a year ago. Housing credit rose by 0.5% to be 5.7% higher over the year, posting the weakest annual growth since records began in 1977. Business credit held steady while personal credit rose 0.1% to be 1.1% lower over the year. Michael Blight CBA's Chief Economist feels "Today's credit data shows the effects of uncertainty on the behaviour of households and businesses. They remain cautious about the economic outlook and are reluctant to lift their debt levels. The uncertainty comes from the constant flow of negative news about the US and EU financial markets. Naturally, people wonder whether Australia can survive unscathed."

The Australian dollar is currently stronger at US101.4 cents and €78.40 cents. The Aussie Dollar hit an all - time high against the Euro a few moments ago of €78.52 cents.

Juliana Roadley, CommSec Market Analyst

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