Australian Stock Market Report

Local stocks advanced today, underpinned by strength in mining stocks on firmer commodity prices and the release of the Argus report on the planned mining tax. The All Ordinaries Index (XAO) gained 33.3pts or 0.7pct to 4862.5.

The Policy Transition Group, headed by former BHP Chairman Don Argus, today recommended current and future state and territory royalties on coal and iron ore be credited against federal taxes. The recommendations have been seen as a win for the major miners, with BHP Billiton (BHP) advancing by 1.3pct to $45.42 and Rio Tinto (RIO) climbing 1.5pct to $86.70. Shares in iron ore miner Fortescue Metals Group (FMG) added 1.2pct to $6.75.

Elsewhere in the sector, Giralia Resources (GIR) soared by 40pct to $4.18 after the iron ore explorer recommended an $828 million off-market takeover offer from Atlas Iron (AGO). AGO shares slumped 1.4pct to $2.92.

Fertiliser maker Incitec Pivot (IPL) rose 3.4pct to $3.96 after telling the market that recent wet weather in the Eastern states is unlikely to have a long-term effect on the company.

The world’s fourth largest uranium producer, Energy Resources Australia (ERA), saw its share price fall 9.3pct to $11.95 on a profit downgrade.

Property group Lend Lease (LLC) rose 6pct to $8.75 after confirming it has bought the engineering and construction firm Valemus from a German company for $960 million.

Among the airlines, Qantas (QAN) rose 0.8pct to $2.59 while Virgin Blue Australia (VBA) slumped 2.2pct to $0.44 on news the company’s Chief Financial Officer has resigned for personal reasons.

Telstra (TLS) shares added 0.7pct to $2.77.

Financial stocks were generally firmer, with the NAB (NAB) rising 1.2pct to $24.21 and the ANZ (ANZ) up 1.8pct to $23.70.

Economic data released today showed Australia’s population grew by 377,111 people over the year to June. Population growth consolidated, increasing by 1.7pct over the past year, however continuing to ease from the 40-years highs reached in the year to March 2009.

A total of 215,600 people migrated to Australia over the year to June - a slide of 31pct or 97,700 people compared with migration levels a year ago.

There were 302,200 babies born in the year to June, the second highest reading since quarterly records began 28 years and only surpassed by the year to March result.

Across the state and territories, it was the mining states of Western Australia and Queensland that recorded the fastest annual population growth rates, a trend that is likely to gain traction in coming years.

Minutes released from the Reserve Bank Board’s December meeting showed the decision to leave interest rates on hold in December was due to a variety of factors. Board members judged that monetary policy was now “mildly restrictive” at a time when “household consumption and borrowing remained restrained”. CommSec expects the next rate hike to take place in April 2011.

The Australian dollar ended the day’s trade at US99.62c, £0.6407 and €75.64c.

On the market overall, a total of 2.3 billion shares were traded, worth $4.1 billion. 601 were up, 521 were down and 406 were unchanged.

At 4.30pm AEDT on the ASX24, the futures contract was at 4766, up 37pts.

There is no economic data scheduled for release in the US tonight.

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