Australian Stock Market Report – Afternoon 12/6/2012

Afternoon Market Report
(18:00 AEDT)

The same theme that has marked the last fortnight continued to hold sway over sentiment in global markets in the last day. The impact of economic reports has been fleeting, as investors continue to school themselves in the nuances of US politics as a way gauging chances of success in resolving the fiscal cliff. Reasonable economic news from the US was balanced by some more aggressive posturing on resolve budgetary issues.

Moves for stock indices throughout the region tended were biased towards the upside. The handful of losses tended to be small in size. Investors remained focused on the Shanghai market in the wake of its 3.8% gain yesterday. The 2000 mark for the index was sustained after the Chinese leadership reiterated its commitment to maintaining stable economic growth.

The ASX200 index was down 11 points or 0.25% at 4,509, the broader All Ordinaries index was down 12.3 points, 0.27% at 4,515.

One of the key aspects of Thursday's session was the limited interest on the part of investors, less than $3 billion worth of shares changing hands. For buyers that did join the fray, their preference was to buy defensive stocks. Consequently Healthcare and Utilities were the best improvers. After some initial selling blood products group CSL (CSL) rose 0.9% to settle at $53.45, hearing device maker Cochlear(COH) finished at $74.91 a gain of 0.6% or 46 cents, Ramsay Healthcare(RHC) closed at $26.36 having risen 2 cents.

Amongst the utilities AGL (AGK) settled at $14.24 a gain of 0.5% or 8 cents. At face value resource stocks appeared to benefit from the improving note out of China in relation to the administration jawboning pro-growth policies. BHP closed at $34.41 an improvement of 12 cents or 0.3 %, Rio Tinto (RIO) rose 0.9 % or 57cents to settle at 59.92. Fortescue Metals Group (FMG) rounded out the session at $3.74 down 1 cent.

One of the features of the week in economic terms came in the form of today's November employment report. The numbers were better than market expectations. 13,900k was added to the economy, compared with the markets estimate of no change in total employment. The report reflected a job market that is in better health than has generally been reported in the media. While job losses continue to receive plenty of coverage, the rise in employment suggests that some sectors of the economy are picking up the slack of job losses in others. The jobs growth occurred in the part time sector, with 18,100 jobs created. Full time jobs decreased by 4,200. The mix in jobs growth in November was the opposite of October, where full time employment increased by 17,600 and part time employment fell 7,400. Today's employment report suggests that the RBA's rate cuts in the middle of the year have helped the labour market. The growth in employment is running at the level required to keep the unemployment rate from rising. It's reasonable to describe the current state of the job market as relatively healthy, given the headwinds being created by the global economy. November's employment numbers highlight Australia quite favourably against other advanced economics. The unemployment rate is 7.8% in the UK and 7.9% in the US, while in the Eurozone it is 11.7%. The unemployment rates in the Eurozone range from Germany with 6.9%, France 9.7%, Italy 10.6% to a whopping 26.2% in Spain.

Ahead in Europe tonight, Central banks are centre stage with both ECB and Bank of England meeting today. However, both decisions will likely result in no change to monetary policy. Today, the US Congress's Economic Committee holds a hearing to discuss the impact of the fiscal cliff on the economy. Additionally weekly employment data is awaited.

[Kick off your trading day with our newsletter]