Australian Stock Market Report – Afternoon 1/30/2013

AFTERNOON REPORT
(5pm AEDT)

The Australian share market made it ten wins in a row today, the longest winning streak since 14-28th July 2009 when stocks had 11 sessions of gains. The All Ordinaries Index (XAO) rose 8.3pts or 0.2pct to 4919.1pts, its highest level since late April 2011.

The Prime Minister of Australia, Julia Gillard, announced today that the Federal Election will be held on Saturday 14 September. There was little reaction on markets or in currencies.

Energy and mining stocks were responsible for most of the day's gains, with financial stocks mixed. Shares in Rio Tinto (RIO) were up 1.5pct to $67.12 while the National Australia Bank (NAB) fell 0.3pct to $27.64.

Insurance stocks clawed back some ground today, following yesterday's knee jerk reaction which saw the insurers sold down on concerns about the recent floods in Queensland. The Insurance Council of Australia is now estimating the damage will come in around $200 million, which should be manageable for the insurers - which have natural peril allowances upwards of $500 million. QBE Insurance (QBE) today gained 4.2pct o $11.75 while Suncorp Group (SUN) was down slightly and IAG (IAG) rose 1.2pct to $4.99.

Wesfarmers (WES) today released its first half sales, which failed to impress investors, sending its share price down 1.8pct to $38.13. Coles sales were up 4.7pct in the first half to $18.3 billion while Bunnings sales gained 5.7pct to $4 billion and Kmart sales were up 3.5pct to $2.4 billion. CEO Richard Goyder said WES would update the market in a few weeks regarding whether the recent Queensland floods had affected supplies to Coles supermarkets. Rival Woolworths (WOW) shares today fell 0.7pct to $31.65.

CommSec has done a report into the recent flooding in Queensland and northern New South Wales and found:

The floods across Queensland and northern NSW are currently estimated to cost the insurance industry around $126 million so far. The 2010/11 Brisbane floods cost $2.4 billion.

At this stage CBA insurance analyst Ross Curran believes the cost of the floods is a manageable event for the domestic insurers.

The impact on crop production is likely to be minimal. In fact CBA commodity analyst Luke Matthews believes the rains will help improve planting moisture for winter crops (wheat, barley chickpeas) which will be planted from April. In addition there is a net benefit for cotton, sorghum, sunflower and sugarcane (despite some losses in some regions), while livestock producers will benefit from increased pasture availability.

The major negative is likely to be for horticultural crops (melons, tomatoes, berries, leaf crops) which will have been water damaged.

CommSec expects the Reserve Bank to look through the near-term impact of the floods. We expect no change to interest rates in the early part of 2013 and see no reason to change our GDP growth forecasts of 3- 3¼ per cent for 2013.

The Australian dollar finished the day's session at US104.72c, £0.6649 and €77.64c.

On the market overall, a total of 2.1 billion shares were traded, worth $4.75 billion. 491 were up, 506 were down and 368 were unchanged.

At 4.30pm AEDT the SFE 200 Futures was at 4860pts, up 6pts.

Ahead tonight, economic growth figures are released in the US while the Federal Reserve hands down its decision following its two day policy meeting.

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