Australian Stock Market Report - Afternoon 3/9/2012

MARKET CLOSE
(4.30pm AEDT)

The Australian market managed to improve today for the second consecutive day, partly making up for three straight sessions of losses between Monday and Wednesday. The All Ordinaries Index (XAO) rose 0.9 pct or 38.3 pts to 4300.5, however still has fallen by around 1.5 pct over the week.

The mining and energy sectors were the best performers with the S&P/ASX 200 Energy index up 1.74 pct while the S&P/ASX 200 Materials index rose 1.85 pct. These are both indices which measure market performance of stocks in those industries.

BHP Billiton (BHP) gained 1.2 pct or 41 cents to $34.71 while the smaller Rio Tinto (RIO) jumped by a more impressive 2.35 pct or $1.47 to $64.13. Australia's largest gold miner, Newcrest Mining (NCM) rose 4.21 pct or $1.29 to $31.93. The gold producer said that new laws in Indonesia limiting foreign ownership of mines will not apply to its current operations. It currently owns 82.5 pct of a large mine in Indonesia.

The major banks were mixed for much of the day, however managed to all ended in the black by market close. Westpac (WBC) was the best, National Australia Bank (NAB) improved by 0.77 pct, ANZ Banking Group (ANZ) rose 0.64 pct Commonwealth Bank (CBA) edged slightly higher.

The retailers were mixed with Harvey Norman and Billabong (BBG) finishing lower while David Jones (DJS) improved by an impressive 5.49 pct or 14 cents to $2.69, however still ended in the red for the week.

On the economic front, Australia posted its first trade deficit in close to a year in January. A surprise $673 million deficit was recorded, with exports rising by 8 pct. Essentially, this means that we imported more goods than we exported offshore over the month. This seems to have been partly due to the timing of Chinese New Year, which was earlier than usual and impacted exports.

Commsec's Chief Economist, Craig James said that the "Trade surplus disappears. Australia recorded a trade deficit of $673 million in January - the first deficit in 11 months and the biggest deficit in 22 months. The early timing of the Chinese New Year is almost certainly responsible for the near $2 billion deterioration in the trade position."

A number of economic reports were released in China today, with the inflation reading coming in lower (better) than expected. The CPI (Consumer Inflation) fell to 3.2 pct in the year to February, down from 4.5 pct in January. This was better than forecast and increases the likelihood of the Chinese government continuing to stimulate its economy.

Mr James said that "Chinese authorities can rightfully claim to have achieved a soft landing. Over the past year the aim has been to slow the economy to a more sustainable growth path and get inflation under control. The latest data shows that the policy has been successful - showing central banks in other parts of the world what can be achieved through discipline."

European markets improved last night thanks to signs that a key debt deal between the Greek government and private creditors will go through. There were some reports that 95 pct of creditors had agreed to comply with the government's debt deal. The deal must be successful for Greece to receive its next €130 billion bailout package to avoid a disorderly default. It needs to have additional funds prior to a March 20 deadline. 66.67 pct involvement is necessary for the Greeks to go through with the planned debt restructure.

Central banks in the U.K, the Eurozone, Canada and New Zealand all met over the past 24 hours and decided to keep rates unchanged once again. Australia's Reserve Bank kept rates on hold at 4.25 pct for the second straight month last week.

Tonight, the German trade balance and inflation figures will be released at 6pm (AEDT). The Greek debt situation will no doubt be the main talking point over the next day.

In the U.S last night, a report showed that there were 362,000 Americans who filed for unemployment benefits for the first time last week which was a little higher than market expectations.

Tonight will be key for the Americans due to an important report on the U.S jobs market which will be out at 12.30am (AEDT), prior to the open of North American markets. The market is expecting around 200,000 jobs to have been added over February and the unemployment rate to remain steady at 8.3 pct.

It was a relatively busy day on the market today, with the volume of shares traded coming in at 2.2 billion today, worth $4.99 billion. 587 shares were up, 412 were weaker and 392 ended unchanged.

At 4.30pm AEDT on the Sydney Futures Exchange, the ASX24 futures contract is down 0.21 pct or 9 pts to 4207.

Due to daylight savings, most major European markets are now trading between 7pm (AEDT) and 3.30am (AEDT). Futures in Europe are pointing to a slightly stronger start to trade tonight.

Dow Futures are currently higher; indicating that U.S stocks could open in the black tonight. American markets open at 1.30am (AEDT). Due to the Americans going back an hour on November 5 last year, U.S markets will be trading between 1.30am (AEDT) and 8am (AEDT).

Turning to currencies, the Australian dollar (AUD) buys US106.3 cents, improving for the third straight day. The AUD is currently trading at £67.3 pence and €80.3 cents.

Steven Daghlian, CommSec Market Analyst

[Kick off your trading day with our newsletter]