Australian Stock Market Report – Midday December 18, 2014

An office worker talks on his phone as he looks the stock board at the Australian Securities Exchange (ASX) building in central Sydney June 15, 2012. Asian shares edged up on Friday, and the euro held most of the previous session's gains, as nervous investors took comfort from plans for coordinated action by major central banks to stabilise markets if Sunday's election in Greece results in turmoil. Reuters

 The Australian share market opened the session with a solid gain for the second consecutive session on the Thursday. The strong tone for the first half of the session came in the wake of similar gains for US and European markets in the last 12 hours. US share markets rallied sharply after the Federal Reserve gave a strong signal that it was on track to raise interest rates at some point next year - pointing to confidence in the US economy. At the close of trade, the Dow Jones was up by 288 points or 1.7%. The S&P 500 index was up by 2% and the Nasdaq gained 96 points or 2.1%. European shares rebounded late on Wednesday driven by a rebound in energy stocks. Speculation of further stimulus by the ECB also boosted sentiment. The STOXX Europe 600 oil & gas index lifted by 3.3%. The FTSEurofirst 300 index rose by 1.9%, the German Dax also gained 1.9%, while the UK FTSE rose by 2.4%.

 Base and precious metals finished mostly lower in the last 12 hours on views the Fed will lift interest rates next year. Additionally concerns remain after China's HSBC flash manufacturing PMI fell more than expected earlier this week. China's Iron & Steel Association (CISA) expects Chinese steel prices to remain subdued in winter as China's steel demand remains weak and overcapacity problems still persist. Despite the weaker tone for their underlying commodities, mining stocks were some of the best improvers on Thursday led by Fortescue Metals Group (FMG) whose shares were ahead by 16 cents or 7% at $2.51,while Mount Gibson (MGX) shares were at 22 cents a gain of 3.4%

 Crude oil benchmarks continued to recover from five-year lows even though figures revealed that US oil production rose to a record high last week. Again,despite the weak underlying tone for energy markets, energy stocks move ahead impressively in early trade on Thursday. Santos (STO) shares were at $8.04 a gain of 46 cents or 6%, Oil Search was up 35 cents or 4.8% at $7.64

 Shares in Dulux Group (DLX) rose on upbeat commentary at the company AGM. The paint maker said that the first two months of the current year has group revenue ahead of the same time last year. Some early softness in the Garage Doors & Openers business, ahead of its new product range launch in December, has been more than offset by growth in Paints & Coatings in the ANZ and other segments. DLX maintained guidance saying that excluding non-recurring items, 2015 net profit after tax is expected to be higher than the 2014 equivalent of $111.9M. DLX shares were up 11 cents or 1.9% at $5.84.

 The Consumer Discretionary sector was a notable underperformer, being the only ASX group to post a loss on the morning. The sector was held back after Flight Centre (FLT) said that difficult trading conditions in Australia meant the travel agency would downgrade its earnings guidance. FLT said it will be a challenge to achieve its initial pre-tax underlying profit target range in the current year. The group had initially estimated a result in the range of $395 million to $405 million, or growth of five to eight per cent. The company said that a solid contribution from its overseas businesses is expected, which in profit terms has consistently grown at 20 to 30 per cent per annum in recent years, although the growth outlook for the larger Australian business is currently unclear. FLT shares were at $31.66 a loss of $3.38 or 9.6%

 In the last 12 hours the Aussie dollar fell to around 81.08 US cents after the conclusion of the US Fed meeting and has since recovered to be at 81.30 US cents at lunch.

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