Australian Stock Market Report – Afternoon 3-7-13

Afternoon Market Report

Thursday was a day of consolidation for regional indices. Whilst political issues remain fluid in Europe the focus is tending towards the other side of the Atlantic. Better economic news is empowering investors who continue to push the Dow Jones Industrial Average further into record territory. The gains on Wall St failed to translate to local trade today although a case could be made for investors holding their fire until the release of key economic figures in the US at the end of the week. Notwithstanding the weaker finish earlier in the session the local market hit its highest levels in 4.5 years

Interest remained strong today despite the softer tone of trade. More than $5.2 bln in shares were transacted today. This last point highlights one of the dominant themes for the local index; the willingness of investors to support the market on weakness. The number of stocks hitting multi year highs remains quite high reflecting the growing level of optimism. Companies hitting record highs today included Seek, Flight Centre, Oil Search, James Hardies, Domino's Pizza

There were a number of data releases in local trade. The Australian Industry Group & Housing Industry of Australia released their Performance of Construction Index. The figures showed a dramatic rise from 36.2 to 45.6. The index is still pointing to a contraction in the construction sector, but it's now suggesting a much the slowest rate of contraction. The reading is instructive because the index appears to be at a turning point at the same time as readings such as consumer and business confidence measures. Once again it points to the growing likelihood that we are at the low point as far as the interest rate cycle is concerned

The January trade figures were a less positive. The deficit widened to $1.1bn from a revised December shortfall of $0.69bn. Exports of goods and services fell by 0.7% in January, while imports rose by 0.7%.The major themes behind the poor trade figures over the last year are lower export values from falling commodity prices and cheap imports from a high AUD.

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