Australian Stock Market Report – Afternoon August 29, 2014

 Buyers and sellers exchanged blows over the course of the session on Friday. Buyers were able to land the final blow which allowed the ASX 200 to end the day with a gain of 1.5 points. The month has yielded a similar outcome in terms of scale, with the index losing 0.12%.

 The NAB was the best improver of the banks after announcing the intended sale of the Great Western Bank in the US through a share market float. Estimates suggest that the lender could raise in the range of $2 billion. The decision is the latest in a number of initiatives that has seen incoming CEO Andrew Thorburn restructure senior management, announce more write downs in the UK business in an effort to retrain the focus the Australian business. NAB shares ended higher by 1.2 per cent at $35.30.

 Miners remain tainted by the weakness in iron ore prices. Fortescue metals Group (FMG) has been a lightning rod for sellers over the course of the month with a 15% decline. BHP and Rio Tinto by comparison have each fallen in the range of 5% this month. Iron ore spot prices have been fallen to USD87/t in the last month and while iron ore port stocks have fallen, a more substantive decrease in port stocks is required to balance the high levels of availability of iron ore supply at the moment. Analysts believe that iron ore prices might struggle to lift without a bigger decrease in the levels of iron ore port stocks as steel mills will likely first look to deplete cheaper port stocks first before buying iron ore on the spot market.

 Retail stocks were in focus on Friday. Harvey Norman (HVN) shares led the way with strong gains in a mediocre market. The retailer turned around two years of declining profits with its bottom line profit rising by 49 per cent to $211.7 million in the year to June, well ahead of the $203 million consensus. The outcome was held back by an $11.6 million drop in the value of the group's property portfolio. Sales at company-owned stores rose 14.4 per cent to $1.51 billion, helped by the roll out of new stores. Franchised store sales rose by 1.14 per cent to $4.77 billion with eight stores closing over the period. HVN lifted its full year dividend from 9¢ to 14¢ a share. The shares ended higher by almost 8 per cent on the session.

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