Australian Stock Market Report – Afternoon 1/15/2013

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Afternoon Market Report 17:30 AEDT

Local stocks ended slightly lower on Tuesday. Market news was a less a factor behind the weaker tone, rather it was a couple of unsuccessful attempts to make new session highs in the morning that provided sellers with some encouragement and over the course of the afternoon the index lost ground.

The ASX200 closed down 0.075 at 4, 716, the All Ordinaries finished 0.06% lower at 4,743

The main point separating the first 2 trading sessions of the week was volume. The volume transacted on Tuesday was a third higher compared to the previous day. It would appear that the area above 4730 is becoming an area of liquidity for the index, a point which will be attracting closer examination over the course of coming days.

Mining stocks were one of the soft spots for the local index, although quarterly production numbers from Rio Tinto helped put a floor under the sector. BHP Billiton eased 0.11% to $36.53, Rio Tinto fell 0.14% to $65.90. Rio reported December quarter iron ore production of 66 million tonnes, which was a modest rise 2% on the previous corresponding quarter and in line with the markets expectations. Global iron ore production rose by 4% in 2012 to a record 253 million tonnes. Thermal coal production was up 16% in 2012 at 20.6 million tonnes although plant maintenance meant that output of hard coking coal was 9% lower at 8 million tonnes. Copper production was up 6% over the last year to 548,800 tonnes which was in line with analysts´ expectations. The commentary from management was along the lines of recent communiques highlighting that markets remain volatile although Rio's business continues to perform well and that the mining continues to take action across its operations to roll back unsustainable cost increases. Elsewhere, Fortescue Metals fell 1.9 % to $4.64, Newcrest Mining rose 2. % to $22.38 and Whitehaven Coal dropped 1.75 per cent to $3.37.

Surf wear retailer Billabong shot higher driven by a takeover offer from VF Corporation who own the North Face and Timberland brands. The bid matches the $1.10 cash per share made in December from the Sycamore consortium led by former Billabong director Paul Naude. The underlying market perception that new suitors would emerge for the board short maker in the wake of the rejected December bid appears to have put a floor under the share price with the stock ending the day at 98 cent after rising 16% on the session

The broader tone of the market will be influenced by corporate and economic news due for release in the northern hemisphere in coming day. Tonight Germany releases its 2012 calendar year growth. Analysts expect a slowdown in German growth from 3% in 2011 to 0.8% in 2012. The ECB's downbeat December 2012 forecasts already suggest that the broader Eurozone economy continued to contract by around 0.5% in the last quarter of last year.

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