Australian Stock Market Report – Afternoon September 2, 2014

Asian stock market — Pedestrians look at an electronic board showing the stock market indices of various countries outside a brokerage in Tokyo June 25, 2014. Asian shares were on the back foot early on Wednesday, taking their cue from Wall Street as the deepening crisis in Iraq and a report that the U.S. could be loosening restrictions on crude exports triggered a rally in oil prices. REUTERS/Yuya Shino (JAPAN - Tags: BUSINESS)

Local shares finish at six-year high

 The Australian market improved this afternoon to finish at the best levels of the day and at a fresh six-year high. Volume was light due to the Labor day holiday yesterday in the US.

 Weakness in the utilities industry aside, all sectors improved on Tuesday. The miners rose by 0.4 per cent despite slightly weaker than forecast Chinese manufacturing reports yesterday and an iron ore price which is trading at two-year lows. Fortescue Metals (FMG) which traded ex-dividend yesterday and slumped by 1.9 per cent, rose by a modest 0.25 per cent. The world's largest diversified miner

BHP Billiton (BHP) gained 0.54 per cent while the country's largest iron ore miner Rio Tinto (RIO) added 0.37 per cent. Smaller producers like BC Iron (BCI) and Gindalbie (GBG) slumped however, with BCI slipping 3.5 per cent and GBG 6 per cent.

 The major banks reversed earlier losses to finish higher, with the exception of National Australia Bank (NAB) which fell 0.1 per cent.

 Telstra (TLS) has been recording solid daily improvements despite trading ex-dividend last week. The country's biggest telco slumped by 3.66 per cent last Wednesday due to its 15cps final dividend. TLS is only 1.5 per cent away from rev-visiting its highs hit last Tuesday. TLS is up 7.8 per cent this year, jumped 20 per cent in 2013 and 31 per cent in 2012.

 The retail sector recovered this afternoon, with Myer (MYR) rising by 1.2 per cent, Billabong (BBG) up 6 per cent, Harvey Norman (HVN) slipped by 0.5 per cent and Flight Centre (FLG) gained 1.1 per cent. Retail stocks have been big movers in the past week due to annual/half-year earnings. HVN is up 3.1 per cent this week and gained 9.2 per cent last week. Despite BBG being up 8.85 per cent over the past two days, its shares slumped by 5.04 per cent last week.

 By the close, 2.1bn shares were traded worth $4.2bn. 530 stocks rose, 461 fell and 373 finished unchanged.

 On the economic front, the Reserve Bank (RBA) kept rates on hold at 2.5 per cent as expected. This is the longest period of interest rate stability we've had in eight years. Unemployment remains high at 6.4 per cent, inflation is under control, the Australian dollar is too high and economic growth isn't shooting the lights out. Rates could very well stay on hold for the rest of the year. Tomorrow, quarterly economic growth statistics will be issued, with 3 per cent annual growth expected. An update on retail spending later in the week will also be important. Next week, a monthly jobs report will be in focus.

 Tonight, data on construction spending in the US will be key together with an update on manufacturing. US and Canadian markets will be trading for the first time this week.

 Tomorrow, all markets should trade normally. Two reports on China's services industry will be issued. Quarterly Australian GDP, a speech by the Reserve Bank Governor and data on car sales will be highlights locally.

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