Australian Stock Market Report – Afternoon 7/10/13

Commsec Evening Report
(17:00 AEST)

Local stocks ended higher on Wednesday, although the gains were modest compared to the improvements seen in early trade. Economic reports originating locally and elsewhere once again spoke to investor concerns about a slowing global growth pulse.

· On the home front, Consumer Sentiment provided little cheer. The Westpac-Melbourne Institute index of consumer confidence fell by 0.1 per cent in July. Three of the five components of the index fell in July. The index is up 3.0 per cent over the year to July. The national reading on consumer confidence remains in optimistic territory although it is clear that consumers remain cautious about the economic outlook, particularly across the mining states. The national discussion about the slowdown in the mining sector is having an impact on the near term outlook. Households in Queensland were quite pessimistic while there was a sharp pullback in confidence levels in Western Australia. It seems that the cost-cutting measures across the mining sector coupled with the pullback of mining investment starting to filter through the wider community

· Dovetailing with the moderation in mining activity was a weaker than expected reading on Chinese trade for the month of June. Whilst Chinese trade recorded a healthy surplus in June, the concern was the surprising contraction in exports and imports. Chinese exports contracted at the fastest pace in almost four years while imports were also weaker. The tightening of credit conditions which has attracted a lot of attention in recent month's likely impacted growth and potentially hurt asset prices. A silver lining remains the containment of inflation, providing scope for stimulus if required.

· The performances across the various sectors were mixed, although industrial stocks were one of the best improved groups. This result was helped by Transurban (TCL) which reported solid traffic growth on its Sydney and Melbourne roads during the June quarter. Revenue for the period was up 6.8% to $207m and up 7.1% on the year. Despite the encouraging numbers the shares ended the day unchanged at $6.80

· A number of important results loom on the horizon in US trade tonight. The minutes of the recent US FOMC meeting will be released. Additionally Fed Chairman Bernanke will speak. Both outcomes will resonate with investors.

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