Australian Stock Market Report – Afternoon 8/9/13

Afternoon Market Report
(17:00 AEDT)

It's been a big week for market events. There's been something for everyone. Central Banks have loomed large as market drivers, economic news has been plentiful and the company reporting season locally has kept the analysts community sleep deprived. Despite this bounty, that old chestnut; the Fed and its expansive Q.E discussion, has come out trumps as the main influence on market sentiment this week. Suggestions that the US central bank could set sail on the tapering voyage as early as next month has left its residue on the ASX200 which has shed 1.2% this week.

There was a weariness in the market on Friday afternoon. The lethargy could be seen in the response to the Chinese data dump late in session. Chinese Industrial Production rose by a better than expected 9.7% over the last year marking the fastest expansion in 5 months; Retail Sales rose by a respectable 13.2%; fixed asset investment pipped expectations with an increase of 20.1%. Under different circumstances the figures could have prompted a rally for the bourse (witness yesterday's Chinese trade data) although this wasn't the case on Friday afternoon.

Friday was the first time Rio traded post result,havingreleased their numbers after the close on Thursday. The result was largely in line with the markets expectations. The interesting point to make where the bulk miners are concerned is the price of iron ore. For some time expectations have turned around a substantially lower price, closer to $100 -$110 per tonne. If prices remain at current levels(circa $130) in the medium term, a re-rating could be in the offing for resource stocks.

Telstra rose almost 2.5% yesterday in the aftermath of a better than expected result. Net profit of $3.813bn was ahead of the markets forecast of $3.77bn. The 14c dividend was in line also. A point worth noting is that the election is largely neutral to slightly positive. Regardless of who wins the looming election, Telstra will remain at the centre of communications policy.

In their quarterly policy statement, the RBA told the market that they're expecting lower Australian growth and subdued inflation. Since the May statement, the RBA has cut its year ended Dec 13 GDP forecast to 2.25% from 2.50%. Another indicator that the door to lower rates remains open

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