Australian Stock Market Report

The Australian sharemarket is gaining for the fifth straight day with the All Ordinaries index (XAO) up 0.6 pct or 24.1 pts to 4286.4. Despite the improvement, shares gave away some of their earlier gains as the XAO was up 1 pct after half an hour of trade.

The mining sector is helping to keep the market positive today, with the S&P/ASX 200 Materials index up 0.92 pct or 106.8 pts to 11697.7. Index leader (the largest company trading on the Australian sharemarket) BHP Billiton (BHP) is up 0.32 pct or 12 cents to $37.22 while the world's third biggest resource company RIO Tinto (RIO) is 1.6 pct or $1.06 higher to $68.44.

Our major banks have been flirting with both positive and negative territory over the first two hours of trade, but are all higher at lunch. Commonwealth Bank of Australia (CBA) is the best performer, up 1.35 pct or 63 cents to $47.34, National Australia Bank (NAB) is up 0.79 pct or 19 cents to $24.24, ANZ Banking Group (ANZ) is 0.76 pct or 16 cents higher to $21.16 and Westpac (WBC) is 0.37 pct or 8 cents higher to $21.78.

Commodity prices rose strongly overnight, with the price of oil up 3 pct. Strikes in Kuwait (the world's seventh largest exporter of oil in 2010) affected crude supply. Woodside Petroleum (WPL), Australia's second largest oil and gas producer is up 0.39 pct or 14 cents to $35.70 while the smaller Santos (STO) is 1.45 pct or 19 cents higher to $12.52.

As a side note, in ancient Mesopotamia around 6,000 years ago crude oil was actually used to make ships watertight and the Egyptians used it as a form of adhesive to build the pyramids. When it comes to the consumption of oil, the U.S still accounts for around 25 pct of the world's total use. There are 450 out of each 1000 Americans who currently own a car. This compares to only 32 out of 1000 Chinese residents who own a vehicle.

The uranium space is one to keep an eye on, as takeover speculation surrounded the sector yesterday. Extract Resources (EXT) has confirmed that it has approached the Australian Securities and Investments Commission (ASIC) regarding its course of action if an offer is made for London listed Kalahari Minerals. Kalahari has a 43 pct stake in EXT. Despite the recent improvement, Australian uranium miners have been hit hard following the nuclear uncertainty sparked by the Japanese natural disasters on March 11. Paladin (PDN) shares have fallen 60 pct since March while EXT is still down around 16 pct.

Overnight, the market seemed in high spirits partly due to both the German and French leaders imposing a deadline for the release of a European debt solution. It is now expected that a resolution will be announced by November 3, prior to the G20 meeting.

Overnight, Apple (AAPL;us) improved by over 5 pct on the New York Stock Exchange. The iPhone 4S has received 1 million pre-orders in just one day.

There was a lack of economic data released overnight, however Germany's trade balance (the difference between exports and imports) came in better than expected for August. The Eurozone's largest economy recorded a 13.8 billion Euro surplus, 4 billion higher than expected. This compares to the latest deficit of 8.9 billion Pounds in the U.K and a staggering US$44.8 billion deficit in the U.S. The U.S has not recorded a trade surplus (where exports exceed imports) for a number of years.

On the rural front, canola prices have been under a bit of pressure due to soybean stocks being a little higher than expected in the U.S. Australia is the world´s second largest exporter of canola and accounts for around 14 pct of the world´s total exports of the crop. This is well behind Canada, which supplies around 65 pct of the world´s canola.

Following the start of daylight savings at the start of October, major Asian markets will be trading between the hours mentioned below until April next year (note that over the next month, some of the times might slightly off due to several countries in the region changing their clocks at differing periods).

The Hong Kong sharemarket trades in two sessions each day and will now open for trade between 1pm (AEDT) and 3.30pm (AEDT) while the second session is between 5.30pm (AEDT) and 7pm (AEDT).

Out of Japan, the first session will be between 11am (AEDT) and 1pm (AEDT) while the second session is between 2.30pm (AEDT) and 5pm (AEDT).

The Singapore exchange will be open for trade between 12pm (AEDT) and 3.30pm (AEDT) for the first session and then between 5pm (AEDT) and 8pm (AEDT) for the second.

Asian markets are mixed at lunch, with Japan trading for the first time this week due to a national holiday yesterday. Japan's Nikkei 225 index is up 1.88 pct or 161.8 pts to 8767.42, while China's Shanghai Composite index is one of the only markets to have lost ground so far this week. Keep in mind that Chinese sharemarkets are playing catch-up since being closed for the duration of last week due to national holidays. The Hong Kong Stock Exchange is yet to open for trade.

So far in trade at lunch, 786 million shares have been traded worth $1.91 billion. 615 shares are up, 235 are lower and 279 are currently unchanged.

The Australian dollar (AUD) cracked through parity with the U.S dollar (1 AUD buying 1 U.S dollar) for the first time in a few weeks this morning and is currently trading at US99.7 cents.

The AUD is the world's fifth most traded currency behind the U.S dollar, Euro, Japanese Yen and British Pound. The AUD accounts for around 7 pct of all foreign exchange trades.

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