Australian Stock Market Report – Afternoon 7/11/13

EVENING REPORT
(4.30pm AEST)

The Australian sharemarket jumped by 1.3 per cent, rising for the third consecutive session. Local stocks have improved by 2.5 per cent so far this week.

There were two major drivers of both equities and currencies today. Firstly, some signs that the Federal Reserve isn't going to tighten monetary policy in a hurry and secondly some better than expected job gains locally.

In the minutes from the Federal Reserve's last monthly meeting out early this morning, many Fed officials signalled they want to see further improvement in the labour market before slowing stimulus (asset purchases). In a speech this morning, the US central bank's chairman, Ben Bernanke stressed that rates will stay low for a lengthy period of time (likely even after the jobless rate falls to 6.5 per cent. This pushed US bond yields and the greenback lower, while sharemarkets rallied.

The monthly jobs report out at 11.30am (AEST) signalled that the Australian labour market isn't shooting the lights out; however remains relatively robust. There were 10,300 jobs added in June, while most economists were forecasting a flat result. Taking a deeper look however, around 80 per cent of the 104,700 jobs created this calendar year have been part time positions, rather than full time. Businesses are remaining hesitant to add staff, preferring to hire contractors, casual staff and part timers.

Commodity prices improved following a weaker US dollar and hopes that yesterday's soft Chinese trade surplus could urge officials to take up stimulatory measures. The miners were the standouts, with BHP Billiton (BHP) up 3.1 per cent, the smaller Rio Tinto (RIO) jumped by 3.7 per cent and the underperforming gold miner, Newcrest Mining (NCM) surged by 11.5 per cent.

The major banks also contributed, with gains of between 1-1.8 per cent for the big four. Underperforming surfwear retailer, Billabong (BBG) jumped by 6.9 per cent, after yesterday's 10.4 per cent slump. BBG remains one of the worst performing stocks in Australia since 2010.

It was another relatively quiet session on the market in terms of volume and value today. 1.54 billion shares changed hands, worth $4.29 billion. 571 stocks were higher, 305 finished in the red while 318 were flat.

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