Australian Stock Market Report – Afternoon September 30, 2014

An office worker is reflected in the window of the Australian Securities Exchange building displaying the ASX50 curve for Wednesday in central Sydney August 7, 2013. Australian shares skidded 1.3 percent on Wednesday, its biggest fall in five weeks, hit by sharp falls in miners and financials as regional markets tracked a soft Wall Street lead amid uncertainty about the U.S. Federal Reserve's stimulus programme REUTERS/Daniel Munoz (AUSTRALIA - Tags: BUSINESS)

Local shares bounce back

 Over the course of Tuesday afternoon the ASX 200 slowly edged higher ending the day up 0.54 per cent at 5292.8 points. In doing so the market was able to make new highs for the session, although the improvements felt as though they were made on shifting sands. The best that could be said for the market at present is that sellers have exhausted themselves, and the index has drifted higher in their absence.

 Private sector credit figures for the month of August were released today by the BRA showing a rise of 0.4 per cent as expected. These figures are important as they contribute to the RBA's assessment of financial conditions. The level of interest rates, asset prices (home prices), the Aussie dollar and credit are the four factors the Reserve Bank assesses to determine financial conditions. Credit is lifting off a low base, home prices are rising, while confidence levels have are healthy and are likely to strengthen further. The big four banks which were trading at flat levels during lunchtime, ended the day higher within the range of 1.3 per cent on the back of the encouraging figures. Westpac Banking Corporation (WBC) displaying the largest gains, ending the day at $32.14 up 1.55 per cent.

 An important factor that has lent itself to the cessation of selling on Tuesday has been the recovery in the Aussie dollar. The local currency was able to claw back a substantial amount of ground over the course of the afternoon. In recent days its steep selloff was a central factor informing the negative atmospherics around domestic stocks. One of the factors helping the recovery for the Aussie was the result of the HSBC Purchasing Managers' Index reading for September. The survey which provides a snapshot of operating conditions in the Chinese manufacturing sector posted a reading of 50.2 in September, down slightly from an earlier estimate reading of 50.5 and unchanged from the three-month low set in August. While this reading signalled only a very small improvement in the health of the sector, there was relief in the market that the figures weren't substantially worse. Notwithstanding the relief, the mining sector as a group ended relatively flat hampered by the continued headwinds for commodities in general. The major miners BHP, RIO, MGX, and AIO today finished slightly up just below 0.1 per cent.

 On the contrary, the recent depreciation in the Aussie dollar has delivered some relief to one of Australia's largest airlines Qantas Airways Limited (QAN). CEO Allan Joyce believes a weaker dollar helps to narrow the gap in relation to their competitive cost base with other international carriers and he hopes to see the Australian dollar fall even further. The Australian dollar buys US$0.8755 at the close of the session.

 At close, 1.9bn shares exchanged hands today worth just under $5bn. 456 stocks ended higher, 513 finished lower and 572 were unchanged.

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