AFTERNOON REPORT (5pm AEDT)
Despite a flat start on the back of falls on Wall Street, local stocks rose to fresh 17 month highs today as the Federal Government scrapped its commitment for a budget surplus in FY 2013.
By close, the All Ordinaries Index (XAO) was at 4646.6pts, up 13.4pts or 0.3pct.
This afternoon Treasurer Wayne Swan admitted that the Federal Government was unlikely to deliver its promised surplus this financial year. The government's promise was dealt a hefty blow after it was revealed tax receipts in October were $3.9 billion weaker than originally forecast.
"This is a wise decision," said CommSec Economist Savanth Sebastian of the announcement. "The government is being fiscally responsible ... don't expect big spending promises".
Financial stocks were generally firmer today, with the sector up 0.7pct.
Mining stocks however gave back recent gains, with shares in Fortescue Metals Group (FMG) down 3.4pct to $4.50. FMG has had a great run in December and is trading up 51pct from the lows it reached in September when iron ore prices dived.
The price of gold remains subdued and is trading at its lowest levels since August, around US$1667 an ounce. Shares in Newcrest Mining (NCM) closed only slightly lower today, down 0.3pct to $22.49.
Oz Minerals (OZL) which saw its share price slide 10pct yesterday, today blamed broker downgrades for the fall. "We are aware that some analysts are updating their modelling and reports for OZ Minerals 2012 production and costs and 2013 expected production and costs,'' Oz Minerals said in a statement. It's believed one broker has downgraded its earnings for OZL by as much as 40pct. OZL today rose 3pct to $6.91.
The Competition regulator has given a tentative nod of approval to Qantas's close alliance with Emirates, but knocked the airlines back on their request for a 10-year timeframe for their deal. The Australian Competition and Consumer Commission today released a draft ruling proposing to allow the airlines to co-operate on passenger and freight operations across their networks. However the ACCC has proposed to limit the deal to five years because of concerns about the impact of the alliance on airline competition between Australia and New Zealand. QAN today rose 0.7pct to $1.46 while Virgin Australia (VAH) shares closed steady at 40.5c.
Surf wear retailer Billabong (BBG) remained under pressure in the wake of yesterday's profit downgrade and concerns its fifth takeover of the year could fall over. BBG shares lost almost 6pct today to close at 80c, just days after a proposed $1.10 per share takeover offer from former board director Paul Naude.
The Australian dollar ended the day's session at US104.88c, £0.6454 and €79.37c.
On the market overall, a total of 2.1 billion shares were traded, worth 6.6 billion. 472 were up, 445 were down and 348 were unchanged.
Ahead tonight, existing home sales, Philadelphia Fed index, and the leading indicator series are released in the US.
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