Australian Stock Market Report – Afternoon 7/2/2012

AFTERNOON REPORT
(5pm AEST)

The local share market rallied today, on the back of positive sentiment out of the US and Eurozone. Investors around the globe appear to have welcomed the outcomes of the European Union summit last week, which essentially saw leaders agree to use bailout funds to assist troubled banks directly, rather than having the borrowed funds added to government debt. Local investors continued their buying spree today, with stocks finishing in the black for a fourth consecutive session. The All Ordinaries Index (XAO) gained 37pts or 0.9pct by close to finish at 4172.5.

Energy stocks were amongst the best performers, after the price of crude oil rallied nine percent on Friday night boosted by the latest Eurozone rescue deal. Crude oil was a touch lower at 5pm AEST, down US$1.15 a barrel to US$83.81. Shares in Santos (STO) rose 2.4pct to $10.91 while Woodside Petroleum (WPL) was firmer by 2.6pct to $31.81.

Upmarket retailer David Jones (DJS) was one of the losers of the day, after being a favourite on Friday. DJS shares slumped 6pct in early trade, as investors questioned the credibility of its UK suitor, EB Group. On Friday EB Group offered $1.65 billion for DJS, however over the weekend it was revealed the company would need to raise capital to pay for the bid. Around lunchtime in the east, DJS requested a trading halt, before announcing to the ASX that the bid had fallen through. EB Group withdrew its offer, citing recent publicity behind its decision. DJS shares slumped 13pct after coming out of the halt, before finishing the day at $2.33, a loss of 10pct. Rival Myer Limited (MYR) rallied by 1.2pct to $1.635.

Another loser today was gaming operator Aristocrat Leisure (ALL), which fell 11.2pct to $2.45 on disappointing earnings guidance. Aristocrat says it expects profit for the six months to June 30 to come in between $30-33 million. That figure is higher than the previous corresponding period's profit of just under $25 million, however investors were expecting more. Aristocrat will deliver the results to the market at the end of August.

Fairfax (FXJ) shares today rose 5.4pct to $0.585 while Qantas (QAN) was firmer by 2.3pct to $1.10 as the airline announced May passenger numbers were up 3.1pct on the year.

In economic data today, the RP Data-Rismark Home Value Index reported capital city home prices rose by one percent in June after falling by 1.4pct in May. Home prices are down 3.6pct on a year ago. However while house prices rose 1.2pct in the month, apartment prices fell by 0.3pct.

Elsewhere, the TD Securities-Melbourne Institute monthly inflation gauge fell by 0.2pct in June and stood just 1.6pct higher than a year ago, a 3½ year low.

The Performance of Manufacturing index rose by 4.8 points to 47.2 in June. Any reading below 50 suggests manufacturing is contracting. Production and new orders continued to contract albeit at a slower pace.

According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 3.3 cents per litre to a 17-month low of 135.3 cents a litre in the week to July 1. CommSec expects the national average retail petrol price (pump price) to fall by a further 4 cents a litre in the next 7-10 days.

The Reserve Bank of Australia meets tomorrow to discuss interest rate settings. CommSec expects rates will remain on hold at 3.5pct.
The Australian dollar ended the day's trade a touch lower against the greenback and at 5pm AEST was buying US102.31c, £0.6533 and €81.05c.

On the market overall, a total of 1.5 billion shares were traded, worth $4.1 billion. 641 were up, 306 were down and 317 were unchanged.

At 4.30pm AEST on the ASX24, the futures contract was at 4098, up 41pts or 1pct.

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