Australian Stock Market Report – Midday October 1, 2014

Traders work on the floor of the New York Stock Exchange July 17, 2014. U.S. stocks fell sharply lower on Thursday, with the S

Tuesday's gains vanish

 Local investors have had little opportunity to savour the gains of the pre-ceding session. The 0.5 per cent gain for the ASX 200 on Tuesday was erased in short order at the open today. Buyers were invisible at the open and the ASX 200 shed 48 points at the low point of the morning. The selling pressure eased over following hours and in the hour leading up to lunch a good portion of the losses were neutralised. The signals sent from US and European markets overnight were mixed. On the one hand a number of European stock indices rose on hopes that weak European inflation data could prompt more stimulus from the European Central Bank. US stocks were softer on Tuesday as investors positioned ahead of Friday's jobs report.

 One of the factors that helped consolidate the recovery for the ASX 200 from the lows of the session was China's official manufacturing purchasing managers' index (PMI) which was released at 11:00 AEST The survey, which is compiled by the Chinese National Bureau of Statistics , was forecast at 51.0 in September by most economists. At 51.1, the actual result was barely changed from the August reading of 51. The official data was slightly higher than the survey conducted by HSBC, whose final PMI reading for September was released yesterday coming in at 50.2. And much like yesterday, the market focussed less on the fact that Chinese manufacturing is treading water at present; Instead investor were more inclined to express relief that the official numbers didn't paint a substantially worse picture. This relief however dint translate to gains for resource stocks which were mostly under pressure. Among junior iron ore miners Atlas Iron (AGO) was ahead by half a per cent at 42.5 cents, Mount Gibson shares were down 7 per cent at 50.5 cents.

 In domestic economic news, retail sales data were a disappointment. The Australian Bureau of Statistics reported that Retail Sales rose 0.1 per cent for the month of August, sales had risen by 0.4 per cent in July. A rise of 0.4 per cent had been expected by most economists in August. The report revealed that department-store sales fell by 2.9% in August, which was the biggest drop since February. Sales of household goods fell by 0.8%, which marked the second monthly decline. The measure which took in the sales of books, pharmaceuticals and cosmetics rose by 1.6%, the biggest increase since February. The national picture saw Queensland as the weakest state for retail sales, while the best performance was from the Northern Territory, where sales grew by 1.7%. Despite the weaker reading, the Consumer Discretionary and Consumer Staple sectors each saw gains overall. Woolworths (WOW) shares were ahead by 0.67 per cent, Harvey Norman (HVN) shares were up by 1.4 per cent, while Myer (MYR) stock was down 1.4 per cent.

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