Australian Stock Market Report – Afternoon 8/6/2012

AFTERNOON REPORT
(4.30pm AEST)

Local stocks had a strong start to the trading week, albeit on very low volumes as many traders took advantage of the NSW/ACT Bank Holiday. Positive jobs numbers out of the US helped boost sentiment while many also bought into stocks ahead of the upcoming reporting season, which starts tomorrow. The All Ordinaries Index (XAO) added 49.9pts or 1.2pct by close to finish at a level of 4292.9.

163,000 jobs were created in the US economy in July, above expectations. The jobs numbers saw European shares hit a four month high on Friday night, while US stocks were also propelled. Over the trading week, the Dow Jones Index rose 0.2pct.

Base metals prices rose in London on Friday night in response to the positive US employment data and materials stocks here were the best performers. Index leader BHP Billiton (BHP) rose 2.2pct to $32 while iron ore miner Fortescue Metals Group (FMG) rose 1.9pct to $4.26 after securing US$1.5 billion in funding to expand its flagship iron ore facility in Western Australia's Pilbara region. Rio Tinto (RIO) which is reporting numbers on Wednesday afternoon, rose 4.1pct to $54.13.

Financial stocks recorded solid gains, with shares in the ANZ Bank (ANZ) adding 0.9pct to $23.56. The National Australia Bank (NAB) was up 0.7pct to $25.16.

Hearing implant maker Cochlear (COH) rose 2.6pct to $66.40 ahead of the release of its full year earnings tomorrow. Analysts polled by Bloomberg expect COH to release a net profit after tax of $160 million.

Harvey Norman (HVN) shares recovered after an earlier slump due to a profit downgrade. The electronics retailer today announced it expects a 39pct fall in full year pre-tax earnings, of around $227 million, as it struggles to deal with the strong Australian dollar and sluggish retail sales. Harvey Norman has not yet confirmed to the ASX which day in August it will report FY earnings. HVN closed slightly higher at $1.975.

In economic data released today, the TD Securities-Melbourne Institute monthly inflation gauge rose by 0.2pct in July and stood just 1.5pct higher than a year ago, a 33-month low.

The number of job advertisements fell for the fourth consecutive month, dropping by 0.8pct in July to stand 9.1pct lower than a year ago.

According to the Australian Institute of Petroleum the national average retail petrol price fell by 0.1 cents to 137.6 cents a litre in the past week. In Australian dollar terms the Singapore gasoline price rose by $5.49 (4.pct) last week to $118.67 a barrel. Over the past month the Singapore gasoline price has risen by A$22.91 a barrel or 14.4 cents a litre. CommSec expects the national Australia average retail petrol price (pump price) to rise by 3 cents a litre in the next 7-10 days.

The Reserve Bank of Australia meets to discuss the official cash rate tomorrow, CommSec is expecting no change with rates to remain on hold at 3.5pct.

The Australian dollar ended the day's trade at US105.65c, £0.6767 and €85.34c.

On the market overall, a total of 1.25 billion shares were traded, worth $2.26 billion. 560 were up, 329 were down and 350. were unchanged.

At 4.30pm AEST on the ASX24, the futures contract was at 4233, up 48pts.

Ahead tonight, the employment trends index is released in the US.

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