Australian Stock Market Report – Afternoon 9/20/13

EVENING REPORT
(5pm AEST)

Despite 0.3 per cent fall today, this still was an eventful and largely positive trading week for many markets around the world. Local shares edged higher by 1.08 per cent, US stocks are up 1.69 per cent and Germany's DAX is 2.1 per cent firmer (both the US and German markets have one session remaining this week).

The defensive telcos, utilities and consumer staple stocks were amongst the lone standouts today. Telstra (TLS) ended 0.81 per cent higher (up 1.64 per cent this week). The latest CBA Business Sales indicator out earlier in the day showed that economy-wide spending jumped by 3 per cent in August. With consumer confidence picking up (partly thanks to the federal election being out of the way), spending is likely to improve over the medium-term. David Jones (DJS) gained by 2.1 per cent, Myer (MYR) rose by 1.46 per cent, while Harvey Norman (HVN) lost 1.5 per cent.

Despite a number of public holidays across the region, the upcoming German leadership elections, Syria and RBA minutes - all eyes were firmly fixed on the US central bank this week. On Monday, Larry Summers, one of the frontrunners to win the Federal Reserve's (US central bank) Chairmanship withdrew from the race. Summers was one of the most hawkish candidates (not a fan of stimulus and QE). This has left the door open for Janet Yellen to take over from Bernanke in January 2014. She is likely to continue in Bernanke's footsteps and favours the gradual tapering of QE when the conditions are 'right'.

On Thursday, the Fed shocked the market by maintaining its US$85 billion worth of monthly stimulus. This resulted in the Australian dollar peaking at around US95.2 cents (a three-month high), pushed bond yields lower and gave markets a boost. Both the Australian and many of the European markets are hovering around five year highs while American equities are at all-time highs.

This weekend, the German elections will be the highlight. On the 22nd September, Chancellor Merkel is likely to win re-election. She has been in power since 2005. Germany is the euro zone's biggest economy. The latest consumer confidence reading is due for release later this evening at 12am (AEST).

In the US tonight, three FOMC members will be speaking about the US economy. Will be the highlight in the US.

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