Australian Stock Market Report – Afternoon 7/24/2012

AFTERNOON REPORT
(5pm AEST)

Local stocks managed to finish in positive territory today, as investors embraced better than expected Chinese economic data and as merger and acquisition activity boosted retail players. By close the All Ordinaries Index added 2pts to finish at 4161, a pretty positive outcome given the weak offshore lead and fact the market was trading down to the tune of half a percent at one stage during the day. The benchmark ASX 200 Index (XJO) added 4pts or 0.1pct to 4133.2.

Financial stocks ended mixed, with Macquarie Group down 0.7pct to $24.30 but Westpac (WBC) firmer by 0.3pct to $22.62. The National Australia Bank (NAB) today raised interest rates on loans to large and medium sized businesses by 20 basis points, blaming the rising cost of raising deposits. NAB shares fell 0.1pct to $23.66.

Fortescue Metals Group (FMG) shares in the materials sector ended down 0.3pct to $4.04, clawing back from an intra-day low of $3.84. BHP Billiton (BHP) and Rio Tinto (RIO) both managed to finish in positive territory, with BHP adding 1.2pct to $30.93.

Elsewhere, private equity firm TPG made a second play for embattled surfwear retailer Billabong (BBG). This time analysts believe the deal will go through, with TPG offering $1.45 per share while also offering the surfwear group´s founder and major shareholder Gordon Merchant and his right hander Colette Paull the ability to keep their shareholding and board seats. BBG shares closed at $1.315, a 20pct increase to yesterday's closing price of $1.10. In February, the retailer said no to a $3.30 per share takeover offer from TPG, and since then has had to tap the market for $225 million through a capital raising.

Elsewhere, the education services provider Navitas (NVT) closed down almost 10pct to $3.92 on news that new international student enrolment numbers are down, in the lead up to the start of second semester for Australian universities.

There was no local economic data released today but Reserve Bank Governor Glenn Stevens delivered a speech in Sydney titled "The Lucky Country". In the question and answer session, the Governor reportedly said that monetary policy settings are about right at present.

Meanwhile, the HSBC "flash" Chinese purchasing managers' index rose from 48.2 to a five-month high of 49.5 in July. The Aussie dollar lifted from US102.6c to US102.9c shortly after the data was released.

At 4.30pm AEST the Aussie dollar was buying US102.9c, £0.6635 and €84.98c.

On the market overall, a total of 1.6 billion shares were traded, worth $3.17 billion. 342 were up, 557 were down and 367 were unchanged.

At 4.30pm AEST on the futures market, the SFE 200 Futures was at 4092, up 2pts.

Ahead tonight, the FHFA home price index is released in the US together with the "flash" Markit manufacturing gauge and the Richmond Federal Reserve Index.

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