Australian Stock Market Report – Afternoon October 2, 2014

A man counts U.S. dollars at a currency exchange office in central Tripoli, June 3, 2014. Libya's currency is under heavy pressure as a breakdown in security and a collapse of oil revenues due to port blockades have badly disrupted public finances and an economy already burdened by exploding state salary and subsidy bills. REUTERS/Ismail Zitouny (LIBYA - Tags: POLITICS BUSINESS)

Some relief for Aussie dollar

 The recovery that stirred the spirits of optimists this morning was fading at lunchtime and not long afterwards the ASX 200 had made a new low for the session. There were no developments in particular that saw the mood shift, and one factor that united the 2 halves of the day was the fact that the majority of sectors remained in the red over the entire session, The ASX200 ending down by 0.7 per cent at 5,298.5 points.

 Cancer therapy developer Prima BioMed Ltd (PRR) jumped on news that it will significantly expand its drug development pipeline. PRR announced that it will acquire the French biopharmaceutical firm Immutep SA, paying as much as $30.3 million in the form of cash, shares and warrants. The acquisition of Immutep is conditional on obtaining shareholder approval at the Company's AGM for an increase in its share placement capacity in order to fund the acquisition. PRR shares ended the session ahead by 7.9 per cent.

 Gold stocks were among the few participants in the mining sector to end with gains. Gold prices have risen by as much as $20 an ounce in the last day on safe-haven demand primarilydriven by economic concerns in Europe; Italy cut its economic growth forecast in 2014 and 2015; Germany's manufacturing moved into contraction territory in September. A 0.3 per cent rise in the yellow metal in Asian trade helped Newcrest Mining (NCM) shares rise 1.7 per cent, whilst Alacer Gold Corp (AQG) was ahead by 1.9 per cent.

 One of the keenly anticipated events of the day was the RBA's Assistant Governor Malcolm Edey and Luci Ellis (Head of Financial Stability) appearing before the Senate Economics References Committee Inquiry into Affordable Housing. Market participants were keen to get some colour on the RBA's thinking around using particular methodologies to moderate the rapid rise in lending to housing investors. Among the remarks was the reiteration of the recent themes outlined in the September Financial Stability Review. Mr Edey was at pains to point out that the responsibility for 'macroprudential' tools lies with the Australian Prudential Regulation Authority (APRA). Therefore any decision on the type and timing of any possible macroprudential regulation resides with the APRA.

 In local economic news today official figures revealed the Australian trade deficit had decreased to $787 million in August, from $1.075 billion in July. Housing data also revealedthat dwelling approvals rose by 3.0 per cent in August and are up 14.5 per cent over the year marking the highest yearlyresult on record. The Aussie dollar responded to the positive figures, finishing the session at a two-week high of US$0.8798.

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