Australian Stock Market Report – Afternoon 9/18/13

EVENING REPORT
(5pm AEST)

At the close, the All Ordinaries Index (XAO) eased by 0.3 per cent ahead of the Federal Reserve's statement on monetary policy tomorrow morning. The two biggest sectors of the Australian market (the miners and financials) headed in opposite directions and played a balancing role for local equities.

Equities are still flirting with five-year highs locally, US stocks have gained over 10 of the last 11 trading sessions and European markets are near their best levels since mid-2008.

Commonwealth Bank (CBA), Westpac (WBC), Goodman Group (GMG), CFS Retail Trust and Suncorp (SUN) added around 4.5pts to the ASX200 index. Fortescue Metals (FMG), Newcrest Mining (NCM) and Rio Tinto (RIO) accounted for 4.2ps of the index's losses.

Internet Service Providers (ISPs), TPG and iiNet were two big winners today. TPG Telecom (TPM) announced an impressive 64 per cent jump in annual profit to $149.2 million yesterday and investors continued to be impressed. 130,000 TPG bundle plans were added together with 76,000 broadband customers. TPM gained 5.9 per cent today, adding to yesterday's 14 per cent rise. iiNet (IIN), which is 3.5 times smaller than TPM, also benefited from the result, adding 5.56 per cent.

The airlines have been the biggest beneficiaries of the Federal Election outcome, with the likely end of the carbon tax helping the sector. Qantas (QAN) is up 12 per cent in just seven trading days, while Virgin Australia (VAH) has surged by 16 per cent this month. QAN edged higher by just 0.68 per cent today, while VAH slipped by 1.1 per cent.

Looking ahead, the US Federal Reserve (North America's equivalent of Australia's Reserve Bank) will be meeting for the second day of their monthly meeting. At 4am (AEST), the Fed will issue its economic projections for the US economy together with the FOMC statement. At 4.30am (AEST), the FOMC press conference will be held. The market is expecting the US$85 billion in bond purchases to be reduced by around US$10 billion each month. Monthly housing data is likely to be overshadowed by the Fed's meeting. Housing starts (the number of properties that started being built in August) will also be issued.

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