Australian Stock Market Report – Afternoon December 4, 2014

A man is reflected as he walks past the Australian Securities Exchange building in central Sydney April 8, 2011. Singapore Exchange Ltd has terminated its $8 billion bid for Australia's ASX Ltd after the Australian government formally rejected the offer on national interest grounds and said changes to the country's financial systems were needed before the bourse could be bought by foreigners. REUTERS/Daniel Munoz (AUSTRALIA - Tags: BUSINESS POLITICS)

The ASX 200 completes a trifecta of gains

 The ASX 200 spent the afternoon consolidating having reached session highs in the latter part of morning trade. Materials and Industrial stocks were the best improved sectors and investors gave the defensive utilities sector a wide berth which saw that group lagging the most.

 Consumer discretionary stocks were a disappointment in the face of much better than expected retail sales data for a second consecutive month. Retail trade rose by a stronger than expected 0.4% in October, building on the buoyant upwardly revised 1.3% outcome in September. Annual growth was running at a solid 5.7% in October. The largest monthly rises were in department stores,where sales were up 2.0%; household goods saw a 1.4% improvement. Clothing, footwear & personal accessories rose 1.1%. On the other side of the ledger, cafes, restaurants & takeaway food sales shrank by 2.1%. Across the States, the growth pattern varied widely. The highest annual growth was in NSW at 9.8% pa, with Victoria the runner up at 6.1%pa. Sales struggled in the mining states of Queensland (2.0%pa) and WA (2.7%pa). It appears that households are spending less in areas like clothing instead focussing on home wares and hardware. The strong housing market may be encouraging households to invest more on dwellings to lift sale prices. Or it may be cheaper to renovate rather than "trade up". Either way these factors are promoting stronger sales in household goods. Retail names however had a muted response overall to the figures. Woolworths (WOW) added 1.2% while Wesfarmers (WES) increased .3%, Harvey Norman (HVN) shares were ahead by 0.5% and Myer (MYR) eased by 3%

 Leighton Holdings (LEI) announced that it had been awarded a contract worth more than $150 million to expand the Sundrop Farms arid climate agricultural operations located at Port Augusta in South Australia. LEI's John Holland subsidiary will design and construct a climate controlled 20 hectare state-of-the-art glasshouse facility that will produce truss tomatoes for supermarkets across Australia. The operations, when complete, will harness solar energy to desalinate seawater to produce fresh water for the crops, generate heat to maintain the correct glasshouse temperature, and produce electricity to power the facility. Work on the project will begin this month, and completion is due in late 2016. LEI shares ended the session up 6.7%

 Sales at agribusiness Nufarm (NUF) have been impacted by dry weather across most of Australia over the first quarter of the financial year. The comments at the groups AGM mean NUF faces a third consecutive year of lower-than-normal summer cropping activity and depressed demand for crop protection products. As a result NUF said that Australian sales are down on expectations and slightly below what they were for the first quarter of last year. Despite the unfavourable weather conditions, earnings expectations for underlying pre-tax earnings for the total business to the end of January are currently seen to be ahead of the same period last year, with management saying they are in a strong position to deliver underlying growth for the full year. NUF shares ended the day with a gain of 4.2%

 The Aussie dollar faded as quickly as it rose after the better reading for retail sales. The local unit was trading at 83.98 US cents having been at 84.30 US cents at the best levels of the session. Currency markets are pensive ahead of central bank monetary policy decisions which will take centre stage on Thursday in Europe, with both the European Central Bank and the Bank of England announcements highly anticipated by investors.

[Kick off your trading day with our newsletter]