Australian Stock Market Report – Afternoon 9/23/13

Commsec Afternoon Market Report
(17:00)

Sellers had the market in a headlock in early trade although the balance shifted following the release of the HSBC flash reading on Chinese manufacturing. The only release of note in regional trade today saw sellers pause as they considered the bigger picture. The Chinese HSBC Flash PMI came in at 51.2 in August, above a consensus forecast of 50.9 and the prior reading of 50.1. Chinese figures released most recently point to the Chinese economy turning a corner which could have positive ramifications for the resource sector in terms of commodity price forecasts.

The immediate reaction to the Chinese data was a dissipation of selling particularly where the bulk miners were concerned. RIO and BHP were conspicuous for the fact that their early losses were halved. Gold miners weren't as lucky. Gold prices continue to swing around with the yellow metal round-a-bout moving lower today after prices fell close to 3% at the end of last week.

Macquarie Group (MQG) hosted their outlook update on Monday . The investment bank expects its 2014 result to be an improvement on the previous year, as long as market conditions aren't any worse than those seen over the past 12 months. Additionally the group expects an improvement in its second half result compared to the one prior.

Warrnambool Cheese and Butter (WCB) has instructed its stockholders not to respond to Bega Cheese (BGA) and its takeover bid labelling it opportunistic. Speculation suggests Chinese buyers are circling and that there will be another bid made for the company.

Looking ahead to Europe, the flash estimates of the September Eurozone PMIs are released today. The Eurozone services, manufacturing and composite PMIs are all in 'expansionary' territory. Significantly, the Eurozone composite PMI is at its highest level since June 2011. Expectations point to the PMIs to edging higher in September confirming that the Eurozone economic recovery remains in its infancy. ECB President Mario Draghi is likely to reiterate this view when he testifies before the European Parliament later tonight European time .

There is no 'top tier' US economic data released this week. Negotiations over US budget issues and expectations for Fed policy will remain the focus of the week. Fed policy expectations will be influenced by twelve speeches from FOMC members this week

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