Australian Stock Market Report – Afternoon November 7, 2014

n office worker walks past an Australian Securities Exchange (ASX) window showing the main losses for the day in central Sydney July 23, 2012. Australian shares slumped 1.7 percent on Monday, the biggest one-day fall in seven weeks, as investors fled from riskier assets such as equities on renewed fears that Spain may be unable to dodge a costly bailout. Reuters

ASX 200 gains for the 4th week in a row

 The Australian sharemarket has recovered yesterday's losses, with all ten sectors finishing firmer. The All Ordinaries Index (XAO) gained 0.78 per cent or 42 points to 5,522, while the S&P/ASX 200 Index (XJO) climbed 0.78 per cent or 43 points to 5,549. The market was boosted by strong gains in the materials and energy sectors and even the financial sector managed to shrug off early losses to finish the day in positive territory. Over the course of the week the ASX 200 has gained 0.4%, marking the fourth consecutive week of gains.

 Over the course of the day the financial sector shrugged of the weight of the ANZ (ANZ) and NAB (NAB)who each went ex-dividend and finished down 2.14% and 2.8% respectively. In company news, shares in the Ten Network (TEN) continued their recent improvement jumping 17.3 per cent to $0.27, on the back of ongoing speculation that Discovery and Foxtel could be weighing up a joint bid for the broadcaster. UGL (UGL) shares retreated by 7.3 per cent to $5.46, adding to yesterday's 14.6 per cent plunge on the back of a near $200 million cost blow-out on a power station it's building as a part of a joint venture in the Northern Territory. Stocks in the agricultural sector were buoyed by media reports and comments from politicians that Australia is on the verge of completing a deal to export cattle to China. The live cattle deal with China could be worth as much as $1 billion a year to the economy. Shares in Elders (ELD) rose by 11 %, while Australian Agricultural Company Limited (AAC) rose by more than 8%.

 In economic news, the Reserve Bank released its quarter Statement on Monetary Policy. The Central Bank has kept its economic growth forecasts unchanged while mildly upgrading its longer term underlying inflation forecasts. Economic growth is seen at 2.50 per cent in December 2014 before picking up to 2.5-3.5 per cent by December 2015. Underlying inflation is expected to hold between 2.25-3.25 per cent by December 2015. One of the main conclusions to be drawn from the update is that with subdued inflation and moderate levels of growth over the medium term, interest rates will remain on hold for the most part of the next 12 months. The consensus expectation for a move higher in the RBA's cash rate has now shifted to well into the second half of 2015

 The US dollar edged modestly higher during Asian trading, which kept a lid on the local unit. The greenback has the potential for further upside given the rising optimism in relation to the October US non-farm payrolls data, which will be released later tonight in the US. The market consensus sees 235,000 jobs being added to the world's biggest economy over the last month. Needless to say that a strong US payrolls report would see the Fed take a more hawkish stance on interest rates which in turn would see a firmer US dollar and a lower Aussie.

 Ahead tonight in the US, Non-Farm Payrolls data for the month of October will be released as well as German Industrial Production figures for September.

[Kick off your trading day with our newsletter]