Australian Stock Market Report – Afternoon7/27/2012

MARKET CLOSE
(4.30pm AEST)

Thanks to a strong session, the Australian market finished the week a touch higher. The All Ordinaries Index (XAO) gained by 1.5 pct or 60.6 pts to 4234.4. The mining, energy and financial sectors all ended significantly higher, with some of the country's largest miners leading the way.

Gold producer, Newcrest Mining (NCM) jumped by 3.44 pct, iron ore producer, Fortescue Metals (FMG) rose 3.75 pct or 15 cents to $4.15 and Rio Tinto (RIO) improved by 2.95 pct or $1.49 to $52.00. The world's biggest mining company, which makes up around 9 pct of the Australian market, BHP Billiton (BHP) gained by 1.45 pct or 45 cents to $31.42. BHP shares are still down by 8.7 pct since the start of this calendar year.

Caltex (CTX) eased by 0.63 pct or 9 cents to $14.17, following broker downgrades. This comes after its decision to close its Kurnell Oil refinery in Sydney. CTX first listed on the ASX back in 1981 and has improved by 20 pct since the start of 2012.

The banks also gained strongly today, with ANZ Banking Group (ANZ) the best of the four, after gaining 1.85 pct or 42 cents to $23.08. Westpac (WBC) and National Australia Bank (NAB) both rose by 1.72 pct while Commonwealth Bank (CBA) jumped by 1.39 pct or 77 cents to $56.18.

In the region, most major markets ended the day higher, with South Korea's KOSPI the best of the bunch after rising by 262 pct or 46 pts to 1829. Shares in Taiwan and Hong Kong both rose by around 2.1 pct while Japan's Nikkei 225 index ended 1.46 pct higher.

We have the European Central Bank (ECB) President, Mario Draghi to thank for today's gains in the region. Mr Draghi lived up to his "Super Mario" nickname after saying that European officials will do whatever is needed to preserve the Euro. Decisive action will now be necessary as today's gains are unlikely to last otherwise. Last night, shares in Italy rose by more than 5.5 pct, while the Spanish and French markets also gained impressively.

On the economic front today, the Australian Bureau of Statistics (ABS) released its latest Gender Indicators report, which shows how men and women have fared on a variety of different economic readings.

CommSec's Chief Economist, Craig James discussed a few interesting findings from the report. He said that "The ABS notes that a fewer proportion of men have a university degree than women but they were more likely to die from suicide or cancer than women as well as a far higher proportion of men were in prison than women. That said, the economic indicators showed that women generally fared worse. New data was provided on people living in low economic households. The good news is that there has been a sharp improvement for men and women. But significantly more younger women (aged 25-34) live in low economic households than men (27 per cent versus 21 per cent.) Not only will the government need to offer more carrot and stick "incentives" to get more women in the workforce to address issues with the ageing population, but also to ensure women are at a lesser economic disadvantage. If there were a higher proportion of younger women in the workforce then they will be less at risk should misfortune occur such as becoming a lone parent."

Next week will be busy on the economic front in Australia, with reports on new home sales, building approvals, private sector credit, the latest home prices across the country, international trade, retail trade and tourist arrivals all due for release.

In Europe tonight, we'll find out if Spain's unemployment rate continues to worsen. The jobless rate is expected to rise from 24.4 pct to 24.7 pct, almost five times higher than Australia's unemployment rate.

In the U.S, all eyes will be on the latest quarterly (April to June) economic growth report tonight at 10.30pm (AEST). The market is expecting the American economy to have grown by 1.5 pct over the past 12 months. This report has the ability to move markets tonight, particularly if the reading surprises the market.

On the earnings front, around 50 companies will be issuing their latest profit results for the second quarter (April to June) tonight. This will include Merck, a German-based chemical and pharmaceutical company.

Volume of shares traded came in at 1.45 billion today, worth just $5.31 billion. 623 shares were up, 286 were weaker and 321 ended unchanged. Today was significantly busier than the average over the past few months.

At 4.30pm AEST on the Sydney Futures Exchange, the ASX24 futures contract is down 0.12 pct or 5 pts to 4168.

Due to daylight savings, most major European markets are now trading between 5pm (AEST) and 1.30am (AEST). Futures are currently pointing to a stronger start to trade.

U.S futures are pointing to a better start to trade tonight also. Due to daylight savings taking place in the second week of March in North America and the end of daylight savings in Australia, U.S markets will now be trading between 11.30pm (AEST) and 6am (AEST).

Turning to currencies, the Australian dollar (AUD) has strengthened and is trading at its highest level of the week. The AUD buys US104.1 cents, is trading at £66.4 pence and €84.90 cents.

Australia is a commodity based economy, with commodities in general account for almost 80 pct of all our exports over the past nine months. In essence, when the going gets tough globally, there is fear of less demand for our commodities, which tends to result in a weaker AUD.

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