Australian Stock Market Report

Local stocks closed flat on the first trading day after the Christmas break, with volumes once again low. A surprise interest rate rise in China dominated investors’ minds in early trade, but some buying occurred in the afternoon session. The All Ordinaries Index (XAO) added 3.3pts or 0.1pct by close to finish at 4871.6 while the ASX 200 (XJO) ended down 2pts to 4775.2.

Banking stocks closed generally higher, after being sold off in morning trade. Shares in Westpac (WBC) added 0.3pct to $22.71 while the Commonwealth Bank (CBA) gained 0.3pct to $51.27 and the ANZ (ANZ) closed slightly higher at $23.73. Shares in the NAB (NAB) closed down 0.3pct at $24.02. Macquarie Group (MQG) closed steady at $37.24.

Mining stocks were sold off, in response to no lead from the London Metals Exchange which has been closed since Christmas Eve. BHP Billiton (BHP) ended down 1.3pct to $45.45 while Rio Tinto (RIO) closed down 1pct to $85.48. Fortescue Metals Group (FMG) closed down 0.2pct to $6.72 after it was confirmed one of its workers died at the company’s Cloudbreak mine on Friday.

Gold miner Newcrest Mining (NCM) added 2.5pct to $40.80 on a firmer gold price, and after informing the market two miners at its underground mine in Indonesia have been rescued following a rockslide 10 days ago.

The energy sector closed flat with the price of crude oil hovering at US$91.36 a barrel at 4pm AEDT.

Shares in Australia’s fifth largest life insurance provider Tower Australia (TAL) rose an impressive 42pct to $3.87on a takeover bid. Directors have recommended shareholders accept the $1.2 billion bid, which values TAL at $4 per share.

Leighton Holdings (LEI) added 0.6pct to $31.15 after selling 35pct of its Indian business for around $103 million.

In economic data, the national average terminal gate or wholesale price of petrol currently stands at a 25-month high of 123.7 cents a litre. Data on retail petrol prices won’t be available until after the Christmas/New Year break.

Unfortunately there is no relief for motorists. While the Australian dollar has risen over the past week, so have global oil prices. In Australian dollar terms the Singapore gasoline price lifted to 26-month highs last week.

There are some rubbery estimates being made on the impact to the economy of the NSW/Queensland floods. While the floods have caused crop losses, other farmers will benefit from higher prices, full dams and favourable growing conditions for summer crops.

The Australian dollar ended the day’s trade stronger against all the major currencies and at 4.30pm AEDT was worth US101.1c, £0.6565 and €77.03c.

On the market overall, a total of 1.76 billion shares were traded, worth $2.58 billion. 638 were up, 431 were down and 358 were unchanged.

At 4.30pm AEDT on the ASX24, the futures contract was at 4774, down 10pts.

Ahead tonight, the weekly mortgage market index is released in the US along with the weekly crude oil inventories report.

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