Australian Stock Market Report – Afternoon September 9, 2014

Markets rise in solid afternoon trade

 Local shares improved this afternoon to make up for all yesterday's 0.36% falls. The All Ordinaries Index (XAO) closed up 0.4 per cent with the mining sector a standout after a tough three weeks. Traded volume was light for the second day with a number of holidays in the region and a busy tail-end of the week.Australian shares are only 1.2 per cent below the six-year highs hit in mid-August despite a tough week. Stocks in Japan, China and Taiwan managed to rise modestly today while shares in Hong Kong and South Korea were closed for holidays.

 Continued tensions in Ukraine and concerns about Scotland's upcoming referendum for independence (18 Sept) kept global markets under pressure. It seems the vote could be closer than previously thought according to a recent independent vote. Scotland is the UK's second biggest economy behind England and was one reason the sterling hit a 10-month low against the greenback last night. Nobel prize winning economist Paul Krugman recently said that a split from the UK could see Scotland becoming "...a Spain without the sunshine" economically.

 The mining sector surged this afternoon by 1 per cent, led by BHP Billiton (BHP) and Rio Tinto (RIO) which both rose by 1.23 per cent. The industry has slumped by around 5.5 per cent over the past three weeks with the price of iron ore still at a five-year low however. Yesterday, junior miner Western Desert Resources

(WDR) filed for voluntary administration, blaming the falling iron ore price for its downfall. High cost producers like Gindalbie Metals (GBG) struggled; falling by 6.4 per cent today.

 No major stocks traded ex-dividend today. Biopharmaceutical company CSL rose by 1.4 per cent, coming back impressively despite trading ex-dividend yesterday. Tomorrow, Woolworths (WOW) and Brambles (BXB) both trade ex-dividend which could hold the market back slightly.

 On the economic front, results from the NAB Business Survey inAugust showed a softening in confidence and conditions. The total value of housing-related lending rose by 2.7 per cent (owner occupiers and investment). Lending to investors was the surprise outcome in the statistics with a 6.8 per cent rise in July; accounting for a record 49.7 per cent of total loans written over the month. Weekly consumer confidence has continued to improve; rising by 0.6 per cent last week.

 At the close, 2.08bn shares were traded worth just $3.9bn. 531 stocks finished firmer, 432 in the red and 370 were unchanged.

 Tonight, manufacturing production and a trade balance will be released in the UK although the upcoming referendum is of more concern to markets. In the US, weekly data on chain store sales,

a talk by a US central bank official and Apple unveiling its new products overnight will be likely highlights. Fans are expecting the iPhone 6 (in two sizes) and an iWatch (a smartwatch).

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