Australian Stock Market Report – Afternoon 1/24/2013

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January 24, 2013 8:22 PM EST

Afternoon Market Report
(17:30)

Consistency has been the by word the the Australian share market this week. The gains have been modest in scale, although the volumes on from time have been surprisingly strong given the holiday period. Today was such a case, with $4.3 billion shares changing hands. From a technical point of view this is quite positive. It highlights the willingness of participants to accept higher prices.

At the close of trade the ASX200 was 0.47 higher at 4810.2 , the All Ordinaries index added 0.45% to 4833.8 points. There were 1.7 billion shares transacted valued at $4.366 billion. 460 stocks ended higher, 508 were lower and 334 closed unchanged.

One of the questions that investors are seeking some reassurance on relates to Chinese growth. 2013 was a period of consolidation following a slowdown which was engineered by Chinese authorities. The debate turns around whether one of the world's most important economies will continue to consolidate in 2013 or whether it will expand with more vigour. To that end todays manufacturing numbers were encouraging with the HSBC "flash" Purchasing Managers Index rising from 51.5 to a two-year high of 51.9 in January. The latest Chinese economic data is encouraging - not just for China, but also for Australia and the globe. Our largest trading partner has achieved a soft landing with the manufacturing sector now expanding at the fastest pace in two-years. The latest indication of recovery in the Chinese economy carries a sting in the tail. The Chinese manufacturing sector is picking up momentum, suggesting increased demand for raw materials such as iron ore and coal. But firmer demand for raw materials also suggests stronger demand for the Aussie dollar. And that stronger currency will make life tougher for a raft of Australian industries including retailing, manufacturing, tourism and export industries more broadly.

Often encouraging economic news from China translates to strength in the resource sector, although todays performance amongst the leading miners was mixed. Rio Tinto dropped 0.24% per cent to $66.14. BHP Billiton rose 0.27% to $37.16. One of the topic being turned over by the markets is the propect of BHP writing down its Australian aluminium and nickel assets. Fortescue Metals Group fell 0.66 per cent to $4.63 after delivering a solid production report. Features of the update included hitting a production run rate during December of 100 million tonnes per annum (mtpa) of iron ore, which bettered the company's guidanc of 95 Mtpa. Shipments of iron ore totalled 19.6Mt, which was an increase of 22% on the last quarter and 32% higher than the same time last year. The Firetail deposit is on schedule to achieve 20Mtpa by the end of the March 2013 quarter. Significantly the King mine was kick started in January and the miner is to deliver production of 40Mtpa by the end of the year. The average price realised rose to US$111/t from US$98/t in the previous quarter. Full year production guidance has been maintained at 82-84mt Elsewhere Whitehaven Coal dropped 2.2% to $3.53. Newcrest rose despite indicating that full-year gold production be at the lower end of guidance, the stock gained 1.83% to $23.98.

The consumer related sectors were mixed Woolworths gained 0.1% to $31.17, Wesfarmers was up 0.4% to $38.01. David Jones was unchanged at $2.39, Myer rose 1.67% to $2.44. Harvey Norman ended at $1.96, unchanged., JB Hi-Fi eased 2.31 per cent to $10.13.

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