Australian Stock Market Report – Midday November 7, 2014

IN PHOTO: Office workers are reflected as they walk past the Australian Securities Exchange building in central Sydney April 8, 2011. Singapore Exchange Ltd has terminated its $8 billion bid for Australia's ASX Ltd after the Australian government formally rejected the offer on national interest grounds and said changes to the country's financial systems were needed before the bourse could be bought by foreigners. REUTERS/Daniel Munoz

Stocks bound ahead on Friday

 Local shares started the last session of the week on the front foot following encouraging gains for US and European markets over night. The ASX opened with a small loss, down 6 points before trading with a gain of 33 points at the best levels of the morning. The early optimism reflected gains seen overseas which were driven by the hope of more central bank led action to promote economic growth. The European Central Bank President Mario Draghi said the bank's governing council was unanimous in its commitment to using additional measures to stimulate the European economy if needed.

 The comments spurred on European stocks; the FTSEurofirst 300 index rose by 0.2%, the UK FTSE also gained 0.2% and the German Dax lifted by 0.7%. US shares rose in a volatile trade. Investors were at once buoyed by the stimulus commentary from the ECB although the weakness in the oil price hurt energy stocks.

 One of the features of the session on Friday has been the improvements for commodity stocks despite underlying prices remaining at multi year lows. Energy stocks were seeing solid gains even though oil prices have continued their retreat in the last day. Crude oil prices fell after OPEC cut its forecast for the amount of crude oil it needs to supply to meet world demand for most of the next two decades due to the emergence of US shale oil. The energy cartel believes that demand for OPEC crude oil will fall to a 14-year low of 28.2 million barrels per day in 2017. OPEC currently produces approximately 31 million barrels per day of crude oil which accounts for about 40% of world crude oil supply. Woodside Petroleum (WPL) was up 1.3%, Oil Search (OSH) was ahead by almost 1 %

 Elsewhere in the commodity space, iron ore miners were well supported despite ore prices remaining at their lowest levels in 5 years. Fortescue Metals group shares were ahead by 2.5%, reclaiming a portion of the 8% decline seen on Thursday. Junior miners were also moving ahead, Mount Gibson (MGX) was up more than 1%, while Atlas Iron (AGO) shot ahead by more than 5%.

 In other company news, speculation continues to inform the rise in shares of the Ten Network (TEN).The group is up 16% on Friday having risen by 7 % yesterday after media reports speculated that Discovery Communications of the U.S. and Australia's Foxtel were weighing a joint bid for Ten.

 The Aussie dollar remains delicately poised in early Asian trade. The local dollar fell to a 4 year low at US85.47c as currency traders waited for RBA's quarterly economic outlook, The Statement on Monetary Policy. The local unit is likely come under more pressure ahead of key U.S unemployment data later tonight local time.

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