Australian Stock Market Report – Afternoon 2/1/2013
By Tom Piotrowski, CommSec Market Analyst | February 1, 2013 6:44 PM EST
The positive atmosphere around the local stock market has continued to build at the end of the week. In the last 2 days there have been a number of setbacks, yet the upward momentum of the index has prevailed.
At the close of trade on Friday, the ASX200 had gained 0.87% to 4,921 slightly below the highs of the session at 4,922.6 which was the highest level since April 2011.The All Ordinaries index had improved 0.83% to 4,942. There were almost 1.7bln transactions valued at close to $4.2 billion.563 stocks ended higher, 438 ended lower and 342 were unchanged.
Some of the more valuable insights on offer in the last day have turned around the ability of the local market to recover from disappointment. The first instance came on Thursday in the wake of a weaker read on US growth in the 4th quarter. The index fell a little over 0.3% although there was evidence that the market was being supported as the market eased. Friday, delivered more evidence of the market's resilience. Late in the morning the index sold off following a weaker than expected print on Chinese manufacturing. The official Purchasing Managers index for China fell from 50.6 to 50.4 in January, compared to expectations of a rise to 51.0. Anything suggestive of a weakening in Chinese activity has the ability to crimp sentiment. At face value to figures were somewhat disappointing although softness in production activity is not uncommon in January due to pre holiday closures. Encouragingly, new orders rose for the fifth consecutive month. In this instance the period following the release saw the market selloff, although by the end of the session the ASX200 had recovered to end at the best levels of the day.
The last day has seen evidence that lower interest rates are finally gaining some traction with households. Today's instalment came in the form of an index of home prices. The RP Data-Rismark Hedonic Australian Home Value index of capital city home prices rose by 1.2 per cent in January. Prices have risen by 1 per cent in the in the three months to January. Home prices are up 1.8 per cent on a year ago. House prices rose by 1.2 per cent in January while apartments rose by 1.1 per cent. House prices are up 1.8 per cent on a year ago and apartments are up 1.9 per cent. The average Australian capital city house price was $505,000 and the average unit price was $423,000. Dwelling prices rose in seven out of the eight capital cities in January: Hobart (up 4.5 per cent), Brisbane (up 2.0 per cent), and Sydney (up 1.8 per
Together with the better lending figures which were released yesterday in addition to the strong December quarter for new home sales there is evidence that lower remains are stimulating activity building and real estate more generally. The banks continue to benefit from the improved data flow. Macquarie Group was up 2.05% to $39.259. Westpac rose 0.93% to $28.30; the National Australia Bank settled 2.3% higher at $28.00. ANZ Banking Group closed up 0.6% at $26.74, Commonwealth Bank of Australia improved 0.93% to $65.05.
The improving atmosphere amongst the insurers was a feature of the week in general, contrasting with the selling seeing in the immediate aftermath of the QLD storms. Suncorp led the way with an improvement of 1.23% to $10.73; QBE was ahead by 0.25% to $11.95 Insurance Australia Group rose 0.6% to $5.05.
Elsewhere, the resource sector remained well bid. The bulk miners are benefiting from a consolidation in iron ore prices at elevated levels. Whilst there were few revelations from this week's quarterly reports, the improving volumes paint a positive picture for the group. Fortescue Metals Group rose 2.3% to $4.79. BHP Billiton gained 1.2% to $37.92, Rio Tinto finished up 1.3 % to $67.20.
Consumer discretionary stocks were amongst the better performer on the session. At present there is a general perception that consumer spending is weak. This is due the modest growth in retail sales of 3%pa. However retail spending is only 31% of consumer spending. Infect overall consumer spending is growing at 6%pa, in line with its 10-year average. Spending on overseas travel and new cars is rising by 8%pa. Internet spending is rising by 20%pa. Today, Kathmandu gained 4.5% to $1.85, following an upgrade of its profit expectations in the face of improved sales. The group now expects a net profit for the first half of between $NZ9.5 million and $NZ10.5 million compared to last year´s interim $NZ6 million profit.
Looking ahead the US employment report is the key to how the markets will trade in the near term. The figures will be instructive regardless of the result. In the event of a weak report the depth of reaction will provide a valuable gauge of the markets conviction. Similarly in the case of a positive result the question will be whether a new phase of the recent rally can be instigated. The markets are looking for 170k jobs to have been added to the economy, and for an unemployment rate of 7.8%.
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