MARKET CLOSE (4.30pm AEDT)
Following on from an uneventful session yesterday, the
Australian sharemarket rose by 1.1 pct or 45.1 pts to 4206.6
today. The defensive healthcare sector was the lone sector to
lose ground for part of the session only for it to improve in the
second half of the session with all other sectors.
One of the standouts today was footwear and clothing retailer
Pacific Brands (PBG) which rose 14.29 pct or 8 cents 64 cents.
The gains came after the company said it is considering a
takeover approach from a U.S based firm. PBG supplies brands such
as King Gee, Superdry and Slazenger.
The airlines also outperformed the broader sharemarket. Qantas
(QAN) rose 5.44 pct or 8 cents to $1.55 while Virgin Australia
(VAH) gained 1.69 pct or 0.5 cent to 30 cents. Last week QAN
shares fell sharply on Thursday and Friday.
Keep in mind that industrial action and bad weather was partly
to blame for a drop in company profit last year which resulted in
a 40 pct drop in QAN's share price in 2011.
The mining sector contributed most significantly to the gains
today with the S&P/ASX 200 Materials index rising 1.7 pct or
182.5 pts to 10911.1. Australia's second largest miner, RIO Tinto
) improved by 1.69 pct or $1.05 to $63.20 while the larger BHP
) ended the session 1.31 pct or 46 cents higher to $35.66.
The major banks ended mostly lower yesterday but made up for
it with gains today. Westpac (
) was the best of the big four and rose 1.05 pct or 21 cents to
$20.20, ANZ Banking Group (ANZ) was close behind after rising
1.02 pct or 21 cents to $20.75, Commonwealth Bank of Australia (
) jumped by 0.77 pct or 38 cents to $49.78 and National Australia
Bank (NAB) edged higher by 0.56 pct or 13 cents to $23.50.
On the economic front in Australia today, the latest report on
building approvals was released. This measures the number of
building approvals granted by councils across the country to
property developers. This is a forward looking indicator and
gives us an idea how many properties could be built in the
future. The number of approvals rose by a better than expected
8.4 pct in November following a 10 pct slide in
Commsec Economist, Savanth Sebastian said that "The release of
the latest figures on building approvals adds further weight to
our view that the housing sector is seeing signs of life after a
period of prolonged weakness - thanks in part to the rate cuts
that have taken place. Yes, the latest pickup in approvals is
encouraging but the unfortunate fact is that the monthly data has
shown a high degree of volatility and the recent gains come after
substantial falls in the prior two months."
Out of Asia today, China posted a better than expected trade
surplus in December (when exports exceed imports). Imports rose
less significantly than expected while exports rose more than
forecast. Exports over the month rose by 13.4 pct (compared to a
year earlier) which was almost a whole 1 pct better than market
expectations and helped China post a US$16.52 billion surplus
over the month.
In Europe overnight, Germany and France both posted better
than expected trade balances. Germany recorded a trade surplus of
€15.1 billion (AU$18.7 billion) while France recorded a trade
deficit (imported more than they exported) of €4.4 billion
(AU$5.4 billion). Switzerland continues to enjoy one of the
lowest jobless rates in Europe however unemployment edged higher
from 3 pct to 3.1 pct.
No major economic data is scheduled for release tonight in
In the U.S last night, the corporate earnings season kicked
off unofficially with aluminium producer, Alcoa after the close
of the U.S market. It posted a loss of US$193 million for the
three months to December 2011. On a positive note however, the
company said that demand for aluminium is looking up in 2012.
Alcoa expects a 7 pct rise in global demand this year and a fall
in supply. Its Australian joint venture partner, Alumina (
) rose 6.85 pct or 7.5 cents to $1.17 in Australian trade
No major economic data is scheduled for release in the U.S
tonight however a number of Federal Reserve members will be
delivering speeches at different events.
The volume of shares traded came in at 1.52 billion today,
worth $3.33 billion. 527 shares were up, 357 finished weaker and
375 ended unchanged.
At 4.30pm AEDT on the Sydney Futures Exchange, the ASX24
futures contract is up 0.12 pct or 5 pts to 4127.
Due to daylight savings, most major European markets are now
trading between 7pm (AEDT) and 3.30am (AEDT). Futures in Europe
are pointing to a stronger start to trade tonight.
Dow Futures are currently higher indicating that U.S stocks
are expected to kick off trade tonight in the black. American
markets open at 1.30am (AEDT). Due to the Americans going back an
hour on November 5 last year, U.S markets will be trading between
1.30am (AEDT) and 8am (AEDT).
Turning to currencies, the Australian dollar (AUD) gained
significant ground over the past 24 hours and buys US103.1 cents
and €80.6 cents. The AUD is around 1.35 cents higher against the
USD than at this time yesterday.
Steven Daghlian, CommSec Market Analyst
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