As the trading week wound down, regional markets were generally set to finish in positive territory. Notwithstanding various economic data points being released over the last 5 days, the overwhelming influence on market sentiment came from headlines related to political developments on the US fiscal Cliff. On that score the last 24 hours has yielded more optimism that US politicians will be resolve this critical matter in a timely fashion. They have 32 day left in which to deliver.
The price action for most global indices has been positive in the last day. Worth noting was the performance of the US market. Solid growth numbers help calm concerns that political uncertainty is damaging precious growth momentum. Figures showed that September Quarter economic growth in the US expanded by +2.7%. The result was a shade short of +2.8% which had been forecast, although it was well above the first estimate that had been provided earlier of meagre 2% growth. Buttressing the growth numbers were strong home sales figures. Pending Home Sales according to The National Association of Realtors showed an increase 5.2% in October, which was well ahead of estimates. These results allowed the Dow Jones to close above the 13,000 level for the first time in several weeks. It's reasonable to conclude that in the absence of the political uncertainty that defines the world's biggest economy, stock indices would be a deal higher thanks the continuing signs of US recovery.
Almost every market throughout the region ended higher on Friday. Japanese economic news surprised to the upside. Industrial production in October rose by 1.8%, compared to expectations of a 2.2% decline. In mainland China, the Shanghai Composite Index bounced back 0.6%, offering some relief to investors after the index plumbed fresh multi-year lows on Thursday.
Stocks leveraged to growth or 'cyclicals' drove the gains helped by the better data pulse out of the US and Asia. Rio Tinto (RIO) rose 2.7% enjoying one of its better days in the last 6 weeks. The market continues to show approval for the miners intention to pare costs and spending by as much as $5 billion by the end of 2014.BHP Billiton closed at $34.39 up 18 cents or 0.5%, Fortescue Metals Group (FMG)finished at $3.91 up 5 cents or 1.3%. However the atmosphere of austerity coming out of the miners is creating strong headwinds for the mining services sector. Logicamms Limited(LCM) which provides engineering, project delivery and asset management services to the mining and energy companies eased to $1.05. Mastermyne(MYE),which provides mining services to the coal mining industry, closed at $1.39 losing 4 cents or 2.8%. Contract mining company, Macmahon Holdings Limited (MAH) settled at 27 cents having lost 1 cent or 3.5%.
Metcash Ltd (MTS.AU) was evidence of the price war waging between the big grocers. The Grocery wholesaler cut its profit forecast today and reported that its first-half net profit had fallen by 13%. MTS said strong competition and store closures would put more downward pressure on earnings which are expected to fall by 2%-6%, compared to earlier estimates of a fall of 1%-3%. MTS shares fell 8 cents or 2.3% to $3.43. Elsewhere in the sector Woolworths(WOW)closed at $29.28 down 7 cents or 0.24% Coles owner,Wesfarmers(WES)ended trade at $35.55 down 14 cents or.39%.
The Australian dollar eased as a response to a growing consensus that the Reserve Bank of Australia will cut interest rates when it holds its final meeting for the year on Tuesday. Figures released Friday showed that lending in the private sector rose by just 0.1 per cent in October after rising by 0.3 per cent in September. Annual credit growth eased from 4.0 to 3.8 per cent, although the annualised pace of growth in the past four months is closer to 2.5 per cent. Credit growth for housing is currently at its weakest on record. Housing credit grew by 4.7 per cent over the past year, the weakest growth rate of growth dating back to 1976. The prospect of a rate cut helped the banks advance, ANZ settled at $24.36, up 27 cents or 1.1%, CBA ended the session at $59.69 for a gain of 25 cents or 0.42%. The NAB rounded out the session at $24.30 an improvement of 35 cents or 1.5% and Westpac (WBC) last traded at $25.50 up 27 cents 1%.
Today's calendar has more top tier economic news from the US. Personal income and spending data, figure describing what US workers earnt and spent in the last month and the Chicago PMI, a key measure of economic activity will be closely watched l. But any news from Washington on the fiscal cliff will continue to get the most traction.
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