Australian Stock Market Report – Midday 11/11/13

MID-SESSION REPORT
(12.45pm AEDT)

The Australian sharemarket kicked off the week almost 0.5 per cent higher, helped by better than expected US jobs growth on Friday and solid Chinese economic news on Saturday. The market however is now barely managing to hang onto a few points of gains. The All Ordinaries Index is up by 4 pts or just shy of 0.1 per cent.

On Friday a report showed that there were 204,000 jobs created in October; around 80,000 more than expected. This surprised the market as the 16 day US government shutdown was expected to impact hiring last month. This now makes the two Federal Reserve talks this week more interesting. It raises the question whether the Fed could taper earlier than the current March 2014 expected date. Saturday was one of the busiest days of the month for Chinese economic readings. Industrial production (factory activity) jumped by 10.3 per cent, retail sales rose by 13.3 per cent and inflation (both CPI and PPI i.e consumer and business prices) remained under control. This is a positive outcome as China is Australia's biggest trading partner.

Chemicals and explosives manufacturer, Orica (ORI) is one of the standouts at lunch, rising by 9 per cent. This following a bigger than forecast rise in FY13 Net Profit to $601.6 million (around $20 million higher than estimated). A full franked 55 cent dividend was announced and sales rose to $6.89 billion. ORI is still down by 15 per cent despite today's surge.

The miners are contributing most to the gains, while the major banks are holding back the broader market most.

On the economic front today, a better than expected housing finance outcome has pushed the Aussie dollar a little higher to US93.9 cents. The number of home loans issued in September rose by 4.4 per cent (we were expected a 4.3 per cent rise and the broader market was estimating a 3.6 per cent gain).

This week locally, consumer and business confidence reports will be highly anticipated together with the quarterly Wage Price Index. Offshore, the Fed will enter centre stage on Thursday as both Ben Bernanke (current Fed Chair) and Janet Yellen (takes the reigns in January 2014) will be delivering talks. This will be of particular interest following the better than expected jobs report on Friday.

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