Australian Stock Market Report – Afternoon 7/22/13

Afternoon Market Report

(17:00 AEST)

The supportive tone seen in the early part of the local session remained in place over the course of the afternoon although the prospect of key company and economic reports in coming days, both locally and elsewhere kept buyers from extending gains. The end result paints a picture of the ASX200 index still consolidating around the 5000 mark.

In terms of examining potential catalysts for the local market in the week ahead, Wednesday's CPI figures are an interesting proposition. One the one hand a lower than expected read will increase the prospect of more rate cuts in the medium term. Lower borrowing cost a clear positive for stocks. At the same time however, a weak read on consumer prices could be seen as a negative for companies striving to get further pricing traction.

One of the features of the last week has been the quality of the quarterlies released by BHP and RIO in particular. BC Iron (BCI:ASX) continued in a similar respect on Monday. The miner reported record production at its joint venture project it operates with Fortescue Metals Group (FMG: ASX). The Nullagine project in Western Australia´s Pilbara region shipped 1.6 million wet metric tonnes of iron ore in the June quarter, marking a 12 per cent increase on the corresponding period in 2012. BCI finished the session 1 cent lower.

The atmospherics around gold continued to improve on Monday. One of the factors contributing to the improvement has been an election result in Japan at the weekend. The Japanese governing party, The LDP, consolidated its influence with an important victory securing control of both chambers of parliament and ushering in an improved environment for the execution of monetary easing, fiscal stimulus and deregulation known as Bionomics. Gold stocks, Newcrest Mining (NCM:ASX) and Kingsgate (KCN:ASX) each rose by more than 7%

Ahead in Europe; the Focus turns back to the European economy. The regular run of top tier sentiment surveys are awaited including flash PMIs, the German IFO survey and the advanced reading for the consumer confidence indicator for the Eurozone. The expected pattern is one of ongoing modest improvement to reflect the Eurozone's return towards stabilisation

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