Australian Stock Market Report – Afternoon7/30/2012

MARKET CLOSE
(4.30pm AEST)

The Australian sharemarket improved for the third consecutive trading session today, with the All Ordinaries Index (XAO) up 0.8 pct or 32.5 pts to 4266.9. Almost all sectors ended the day higher, with the exception of the energy players which ended largely flat.

The S&P/ASX 200 Financials index (a measure of market performance of the financial sector) rose by 1.28 pct or 55.4 pts to 4395.6 today and led the rest of the market higher. The big four banks all improved, with Commonwealth Bank of Australia (CBA) up 1.82 pct or $1.02 to $57.20. CBA is trading close to its highest level since April 2010. National Australia Bank (NAB) is 1.48 pct or 36 cents higher to $24.61 and is trading at its best level in around two months. ANZ Banking Group (ANZ), Australia's third largest banks is up 1.39 pct or 32 cents to $23.40 and is around a three month high. Finally, Westpac (WBC), the country's second largest bank, jumped by 1.13 pct or 26 cents to $23.26 however is trading close to a 14 month high.

Telstra (TLS) continues to perform strongly, with its shares rising by 0.51 pct or 2 cents to $3.98. It is trading around its highest level since December 2008 and has gained by 19.5 pct since the start of the year.

The miners rose in-line with the market, gaining around 0.7 pct. BHP Billiton (BHP) gained by 0.67 pct or 21 cents to $31.63 while the smaller, Rio Tinto (RIO) jumped 0.58 pct or 30 cents to $52.30.

With Olympic fever sweeping the country, it perhaps is an interesting time to mix sport with finance. The gold medals for these games weigh around 412 grams, only consist of around 1.5 pct gold, are mostly made up of silver and copper and based on current commodity prices are worth around AU$676 each.

On the economic front today, a report showed that the number of new homes sold last month rose by 2.8 pct in June, making it the third straight gain. CommSec's Chief Economist, Craig James said that "The recovery in home building is underway. The $64 question, however, is how fast will activity lift in coming months. New home sales were at 11-year lows just four months ago, so it is clear that the recovery is in its early days and there is a fair way yet to travel for activity to reach more "normal" levels. Still, an increase in new building will have multiplier effects across the country, particularly the key building areas of outer Melbourne, Perth and north-west and south-west Sydney."

As expected, petrol prices have continued to rise according to the latest report from the Australian Institute of Petroleum. The national average price of unleaded petrol at the pump increased by 1.5 cents to 137.7 cents a litre last week.

Mr James said that "The ebb and flow of oil prices continues. In the early part of last week the Singapore gasoline price eased before kicking higher on Friday as optimism returned to equities and commodities markets. The bottom line is that motorists should expect petrol prices to edge their way higher if the positive mood on financial markets continues. The Singapore gasoline price has lifted from recent lows by around 11 cents a litre (after being up 17 cents at one stage) and the wholesale price in Australia (terminal gate) has gone up by around the same amount. But the retail or pump price of petrol has varied markedly. Average petrol prices in Adelaide have lifted more than 13 cents over the past three weeks with Sydney up 9 cents. But petrol prices have fallen just under a cent in Hobart, Canberra and Darwin while Melbourne prices have lifted just over 8 cents."

Retail petrol prices are expected to continue to rise over the next few weeks.

The start of a new month tends to be a busy time for economic news in Australia, and this week will be no different. The latest report on building approvals, home prices, retail sales and international trade will all be issued over the coming days.

On the company front, Origin Energy and Paladin Energy will be issuing their latest quarterly production reports tomorrow. Hutchison Telecommunications, the owner of Vodafone will be issuing its first half profit results tomorrow, while Navitas is due to release its full-year results.

In the region today, Japan recorded a weaker than expected industrial production reading for the month of June. This is the third straight negative reading, dragged lower by less demand for cars and motor vehicles.

Looking ahead to the rest of the week across Asia-Pacific, the latest monthly manufacturing reading out of China will be the main attraction. The report will be issued this Wednesday, is a measure of the health of China's manufacturing industry and can move markets.

In Europe tonight, Spain's quarterly growth numbers will be issued and is expected to show a 0.4 pct contraction. Italy will also be conducting a 10-year bond auction. In the U.K, the latest consumer confidence report will be out tomorrow morning.

For the rest of the week, both the European Central Bank (ECB) and the Bank of England (BoE) will be holding their monthly interest rate meetings.

In the U.S this week, keep your eye on the monthly jobs report and unemployment rate which is scheduled for release this Friday. The U.S Federal Reserve will be meeting mid-week to discuss monetary policy.

Volume of shares traded came in at 1.47 billion today, worth just $3.75 billion. 502 shares were up, 390 were weaker and 359 ended unchanged.

At 4.30pm AEST on the Sydney Futures Exchange, the ASX24 futures contract is up 0.84 pct or 35 pts to 4208.

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

U.S futures are pointing to a better start to trade tonight. 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 around US2 cents higher now, than this time last week. The AUD buys US104.6 cents, is trading at £66.6 pence and €85.1 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.

[Kick off your trading day with our newsletter]