Australian Stock Market Report – Afternoon 12/7/2012

AFTERNOON REPORT
(4.30pm AEDT)

Local stocks enjoyed a solid end to the trading week, following positive offshore moves and strong gains from blue chip stocks.

The All Ordinaries Index (XAO) finished the session firmer by 40.2pts or 0.9pct to 4555.9, its highest close since the 19th October.

Overnight, European markets rose to an 18 month closing high, while US stocks had modest gains after President Obama said there could be a quick deal to avert the fiscal cliff if Republican leaders agree to tax hikes for those making more than $250K a year.

Looking at individual sectors; financial stocks performed strongly as did the miners despite mixed commodity prices. Among the banks, the Commonwealth (CBA) and National Australia (NAB) were standouts. CBA shares gained 0.9pct to $60.88 and are now trading near record highs, while the NAB firmed by 1pct to $24.50.

Index leader BP Billiton (BHP) also did well, up 1pct to $34.74 while Newcrest Mining (NCM) added 1pct to $24.34.

Retailer Myer Limited (MYR) held its Annual General Meeting (AGM) today, with the company blaming weak economic conditions, the introduction of the carbon tax and a GST loophole for goods purchased overseas for its weak performance. But Chairman Paul McClintock said traditional stores remain Myer's core business despite strong online sales, and no company should abandon its core. Chief Executive Bernie Brookes said purely online retailers have the advantage of rent and labour costs. Myer´s full year profit in 2011/12 fell 12.7 per cent from the previous year to $139.4 million, with sales down 1.3 per cent. Its sales in the first quarter of the current year were up one per cent from the same period in the previous year. Despite an initial gain in its share price, MYR closed down 0.5pct to $2.16. Retailer David Jones (DJS) closed higher by 2pct to $2.51.

Blood products maker CSL Limited (CSL) rose after receiving a broker upgrade. CSL shares added 2.5pct today to $54.77.

Major Ten Network (TEN) shareholder Gina Rinehart has indicated she will participate in the company's $230 million capital raising. TEN has been in a trading halt since Wednesday. The broadcaster held its AGM yesterday, indicating further cost cutting measures and a "simple and clear" strategy was on the cards for 2012. TEN last traded at 32.5c.

After the bell yesterday it was revealed News Limited (NWS) will cut another 60 editorial production jobs after outsourcing production of nine regional newspapers. NWS shares today added 1.7pct to $24.25.

In economic data today, Australia recorded a trade deficit of $2,088 million in October, following a downwardly revised $1,420 million (previously $1,456 million) deficit in September.
Imports of capital goods rose by 12.7 per cent in October - marking the strongest monthly growth in almost five years. Exports of goods rose by 0.4 per cent in October while imports of goods rose by 3 per cent. The net services deficit narrowed by $8 million to $968 million in October. Rural exports rose by 5.4 per cent in October while non-rural exports fell by 1 per cent.

"The trade data is another aspect that does highlight the sluggish nature of the domestic economy and justifies the recent interest rate cut," said CommSec Economist Savanth Sebastian of today's data. "Looking forward the lower terms of trade, will ensure the Reserve Bank can afford to boost household activity and as such further rate cuts cannot be ruled out - particularly given the low inflation environment."

The Australian dollar briefly touched US105c during the overnight session, but lost ground after European Central Bank Mario Draghi downgraded the ECB's forecasts for GDP. At 4.30pm the AUD is worth US104.81c, £0.6528 And €80.83c.

On the market overall, a total of 1.4 billion shares were traded, worth $3.9 billion. 531 were up, 405 were down and 364 were unchanged.

At 4.30pm AEDT the SFE 200 Futures was at 4561, up 46pts.

Ahead tonight, US non-farm payrolls (jobs) data is released. The Dow Jones Futures Index is flat.

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