Australian Stock Market Report – Afternoon 4/9/14

EVENING REPORT
(4.20pm AEST)

The Australian sharemarket had its best day in two months, with the All Ordinaries Index (XAO) ending 1 per cent firmer by the close. The ASX200 Index finished not too far off a six-year high and is 75 per cent higher than the lows hit in March 2009. At its best, local stocks were up 1.2 per cent today and the low was hit on the open, with the XAO up 0.6 per cent. All sectors improved, with some solid gains from the miners and banks helping most.

Upmarket department store owner David Jones (DJS) shot higher by 22.5 per cent, following a $2.15 billion takeover bid from South African based retailer Woolworths. DJS's board recommended its shareholders accept the $4 per share offer, which is a 25 per cent premium to Tuesday's closing price. Subsequently, Australia's largest owner of department stores, Myer (MYR) issued a statement announcing the withdrawal of its offer for DJS. MYR surged by 3.9 per cent, partly making up for its 15 per cent takeover offer induced sell-off in March.

The world's largest miner BHP Billiton (BHP) continues on its strong run, with the resource giant jumping by 1.3 per cent and closing well above $38.00 per share. Its $38.40 close was its best finish since 26 February. BHP has improved 12 of the past 14 trading sessions. The market's speculation of a potential $20bn demerger of the miner has helped its shares surge in recent weeks.

Yesterday's announcement of a Free Trade Agreement (FTA) between Australia and Japan helped beef producer, Australian Agricultural Company (AAC) surge by 4.5 per cent on Tuesday and rose by another 0.78 per cent today.

On the economic front, the number of new owner-occupier home loans rose by 2.3 per cent February with a big jump in loans to fund the construction of homes. The Australian dollar shot higher following the report. Looking ahead, a quarterly inflation report out later this month will be key for the Reserve Bank's decision making process on interest rates. No rate move is likely for the next few months.

At the close, 1.94bn shares changed hands, worth $5.24 billion. 540 stocks finished higher, 384 in the red and 367 were flat.

No major market moving data is scheduled for release in Europe tonight. One of the more important data points will be out in the U.S. though in the form of the Fed Reserve's minutes from its last meeting. This will be issued at 4am (AEDT). Comments from the Fed always tend to give the market a better sense of what the central bank is thinking in relation to reducing stimulus.

Tomorrow, the monthly jobs report will be issued in Australia for March. Employment rose by a record 47,300 in February so tomorrow's result will be looked at closely. China's monthly trade numbers are also expected tomorrow.