Australian Stock Market Report – Afternoon October 14, 2014

IN PHOTO: Office workers are reflected as they walk 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

 Local shares posted one of their better gains of the year today with the All Ordinaries Index (XAO) rising by 1 per cent or 50.9pts to 5204. Despite the improvement, the market's downtrend remains firmly in place with losses of over 8 per cent recorded since the start of September. The next support level for the ASX 200 is around 5070.0.

 Global markets were mixed overnight with US shares slumping in thin holiday trade while European markets gained some ground. The Dow Jones slumped by 1.3 per cent while the tech specific Nasdaq continues to be the main underperformer - falling 1.46 per cent (adding to last Friday's 2.3 per cent slide).

 Miners did best with the S&P/ASX 200 Materials Index (a measure of resource industry performance) jumping by 2.6 per cent. Iron ore (Australia's biggest export) rose by 3.9 per cent or $3.2 to US$83.1/dry tonne overnight thanks to an unexpected rise in September imports out of China yesterday. The iron ore price is still down 38 per cent this calendar year however.

 Smaller iron ore producers were the standouts today, with BC Iron (BCI) up 13 per cent, Atlas (AGO) up 14.8 per cent and Gindalbie (GBG) up 6.4 per cent. Larger producers while not gaining as impressively still improved. BHP Billiton (BHP) surged by 2.6 per cent, Rio Tinto (RIO) rose by 4.1 per cent and Fortescue Metals (FMG) gained 5.5 per cent.

 Energy stocks erased all of Monday's losses with a pause in the selling. The industry rose by around 0.8 per cent. Excess supply and the expectation of slowing demand in Europe havepushed the price of oil down by around 6 per cent this month. Oil and gas producers in Australia were pushed 4.5 per cent lower last week.

 Tonight US earnings will be in focus with Citigroup, Intel, JP Morgan Chase, Wells Fargo and Johnson & Johnson out with their third quarter earnings. European industrial production out tonight will also be important following last week's sluggish German reading.

 Volumes picked up this afternoon with 1.9bn shares traded worth a healthy $5.7bn. 498 stocks ended higher, 403 in the red and 383 were unchanged. Putting this in perspective volume was around 20 per cent lighter than yesterday.

 The Australian dollar has improved from US$0.874 to US$0.878 by the close.

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