Australian Stock Market Report – Afternoon 11/14/2012

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By Tom Piotrowski, CommSec Market Analyst | November 14, 2012 7:21 PM EST

MARKET CLOSE
(4.30pm AEDT)

The selling of recent sessions subsided for regional stocks today, although investors remain vigilante. The price action on global markets in the last day has been less than encouraging. Political developments on either side of the Atlantic will continue to be the main influence of sentiment in the near term.

The S&P/ASX200 settled at 4388 points, up 0.2 per cent. The All Ordinaries index rose 0.15 per cent to 4410.7 points. Value was a little more modest today with $3.6 billion worth of shares changing hands.

Banks were sold with some gusto on Tuesday. The lower prices played a part in the group being supported today and allowing the index to remain in positive territory. NAB improved 0.56% to $23.24,
ANZ rose 0.62% ending at $24.20, CBA closed 0.66% higher at $59.09.

At face value the sentiment readings of the last 2 days point to a substantial disparity between consumer and business confidence. Consumer sentiment enjoyed an upswing last month. The Westpac/Melbourne Institute index of consumer confidence rose by 5.2 per cent in November to a reading of 104.3 its highest level in 19 months. Compared to 12months ago Consumer Sentiment has improved by. 8.5 per cent on a year ago. More interesting is the fact that the survey of 1,200 people was over the period of November5-11, meaning that respondents had some time to consider the RBA's decision to leave interest rates on hold at the November Board meeting.
All five components of the index rose in November. The largest increase was registered in respondent's views on "family finances versus a year ago" which rose by 11.1 per cent in November. The gauge of family finances over the next year rose by 1.3%. Economic conditions over the next 12 months rose by 6.0%. Economic conditions over the next 5 years rose by 3.4%.The measure on whether it was a good time to buy a major household item rose by 5.1%.The survey highlights the point that for the first time since February consumers are more optimistic than pessimistic about the economy. If the results are sustained over the next few months it will provide a degree of support for confidence amongst retailers in the lead up to Christmas. Investors were less than effusive towards the retail sector today. Amongst discretionary stocks, David Jones improved 0.82% to $2.46, Myer fell 0.75% to $1.98. Harvey Norman was unchanged at $1.81 and JB Hi-Fi rose 0.79% to $10.18. Staple saw Woolworths lose 0.59% to $28.43 and Wesfarmers gained 0.56% to $33.94.

In other economic news figures showed wage growth was slightly lower than expected at 0.7% in the third quarter and is up 3.7% over the prior year. That's below the 4% that normally gives the RBA concerns. December remains a "live" meeting for a rate cut, given the headwinds that face the Europe and the US in the medium term rather than any specific recent development.

Shares in Ten Network edged higher to close at 28 cent. A talking point for investors were comments made by Laurence Freedman who was part of an investor group who brought Ten out of receivership in the 1990's. Mr Freedman's comments in the press turned around the idea that Australia´s market place was too small to accommodate three free-to-air TV channels. Investors in general remain wary of the near term prospect for the health of the overall advertising market. Shares in Seven West rose 2.4% to $ 1.325. Fairfax Media announced that it had sold its rural media business in the US for almost $77 million, the shares ended almost 4% to 39.5 cents.

Looking ahead to overseas markets tonight tier one economic news will be in focus. US retail sales data always have the potential to impact markets. The FOMC minutes will be released later in the evening. Most US economic data has been reasonably positive in recent months. US retail sales have strengthened appreciably. The outlook for retail spending has improved, as noted by a better than expected result from Home Depot last session. Employment growth has continued to gain momentum. Bank lending standards have loosened for credit cards and auto loans. The ongoing increases in house prices hold out the possibility that lending standards for mortgages can also be loosened, thereby stimulating spending even further. Whether better economic news has any impact on markets is another question. Concern over the Fiscal Cliff remains the central focus for investors.

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