Australian Stock Market Report – Afternoon July 16, 2014

Tony Abbott at New York Stock Exchange — Australia's Prime Minister Tony Abbott (L) rings the opening bell at the New York Stock Exchange June 10, 2014. REUTERS / BRENDAN MCDERMID REUTERS

PM Report 5pm (AEST)

The Aussie market came under pressure within 30 minutes of the start of trade today, then thanks to a late surge, local shares higher for the second time this week. The All Ordinaries Index closed up 0.16% or 8.8pts higher; closing above 5,500 points for first time in a week.

It was a mixed night in the US the where the tech heavy NASDAQ was hit by comment from the New chair of the US Federal Reserve chair, Janet Yellen. Janet referred to "stretched valuations" for smaller stocks in social media and biotechnology sectors. Yellen also noted that the economy still needs support: ´´Although the economy continues to improve, the recovery is not yet complete.´´ Yellen continued to highlight the considerable slack in the job market.

During the Asia trading day, at last, we saw some consolidation in metal and oil prices, the NYMEX US$ oil price added US$0.62 to close at US$100.57 a barrel.
The gold price, which has fallen over US$40 this week, turned higher and closed at US$1,298/oz. The material sector rose after a few tough days and was one of the best performing sectors today, helped by quarterly production numbers from Rio Tinto (RIO), Fortescue (FMG) and Iluka Resources (ILU).

Rio Tinto's June quarter report showed iron ore hit record levels as expected and the firm lifted its copper guidance after mining to 164.800/tonne of copper up 4% over last quarter. Rio posted strong results from its Pilbara iron ore production at 105.7M/tonnes up 11% over the last year also up 11% over the last quarter. RIO's and its rival in the space BHP Billiton Limited (BHP) moved higher.

Fortescue (FMG) also released its June quarter production report this morning but the company has released its expectation last week and most of the numbers were in line with the last statement. FMG said "said it expects to ship as much as 29% more iron ore to buyers in countries such as China over the coming year after completing expansion of its Australian operations."

Iluka Resources Limited (ILU) released its Q214 production report today. Iluka's first half production of Zircon/Rutile/Synthetic (Z/R/SR) was 252.000t up 5.9% over the last year, ILU share price up 3.5%

Boart Longyear Limited (BLY) shares were 34.8% at the end of trade, after hitting an all-time low of $0.085. The company came out of a trading halt and responded to an ASX enquiry today. It confirmed that it is in discussions with restructuring advisers had taken place as part of a strategic review to find ways to repair its balance sheet.

Qantas Airways Limited (QAN) management today said it "welcomed federal government plans to raise foreign investments caps on the airline, but would still prefer to see the restrictions removed completely. QAN fell by 1.58% today.

In Australian Economic data -
Dwelling starts (commencements) in the March quarter lifted by 8.7% to 48,964 in seasonally adjusted terms). Houses rose by 12.8% and apartments rose by 4.2%. There were 176,477 new dwellings over the 12-months to March, the highest annual result in 3½-years and up 12.2% on the previous year.

The Economic data out from China put pressure on the Australian dollar
The Chinese economy grew at a 7.5% annual pace in the June quarter, ahead of forecasts (7.4%). The economy grew by 2% in the June quarter, up from 1.4% in the March quarter. Retail sales rose at a 12.4% annual rate in June, mildly below forecasts. Industrial production rose at a 9.2% annual rate in June, below the forecast average but up from the 8.8% annual rate in May.
The Australian Dollar fell away after the Chinese numbers were realised and is still over at 0.9348.

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