ASX CLOSE: Markets manage to eke out second day of gains

Tuesday 15th December 2009

Across Asia, all regional indexes are lower despite the broadly positive leads from overnight markets. Concerns over business sentiment after yesterday's uninspiring Tankan survey and a stronger Yen are clearly hindering the Japanese market and inturn weighing on the region. The Hang Seng is the region's worst performing market, down 0.7%, while the Shanghai Composite is lower by 0.2%. The Kospi and the Nikkei 225 are seeing more modest losses, both weaker by 0.1%.

Building on yesterday's late session rally the ASX 200 managed to eke out a second straight day of gains finishing higher by 0.4% at 4673.5, but well off its intraday high of 4691. Gains for the day were relatively broad based with leadership coming from the energy sectors healthcare and property sectors.

As we thought might be the case as we approached the Christmas break, we are seeing pretty uneventful trading with investors not showing a great deal of enthusiasm to rush prices higher. So while we may be moving higher, we're not moving convincingly higher and this is why we think the market may struggle to make any meaningful gains between now and year end.

After receiving very little love over the last week and half (due to nine straight down days for crude oil prices) it was nice to see the energy sector leading the way today to be the best performed sector, higher by 1%. After taking another stomach punch yesterday, courtesy of Woodside's capital raising (a bit of energy sector reshuffling was clearly evident) the heavyweight names seemed to rejoice in a stronger crude price during the Asian session.

Santos, Oil Search and Caltex were among the major names making up yesterday's lost ground, trading higher by 0.4%, 2.2% and 4.2% respectively.

The weaker USD overnight and broadly higher base metal prices also saw our miners back in vogue today. Heavyweight miners BHP and Rio Tinto closed higher by 1.1% and 0.5% respectively while Riversdale Mining enjoyed some buying interest to be stronger by 3.9%. With spot gold gaining more than US$5 overnight and firming slightly in Asian trade to be currently trading at US$1128, bellwether gold miners Newcrest Mining and Lihir Gold ended in positive territory by 2.0% and 1.2% respectively.

Whether the apparent easing of the Dubai debt situation and quietening speculation of US rate hikes is enough to reinvigorate the risk trade and spur a materials led end of year rally is yet to be determined. Our gut feeling is that market just doesn't have one last hurrah in it this year.

Across the financial space we saw a mixed performance from our Big-4 banks. ANZ, Westpac and the National Australia Bank finished in positive territory by 1.3%, 0.4% and 0.1% respectively while the CBA gave up earlier gains to finish lower by 0.2%. As a sector the financials were higher by 0.3%.

With the market more aggressively minded today and seemingly focussed on the more cyclical sectors, we saw a bit of selling pressure amongst our consumer names, both staple and discretionary. Myer, JB Hi-Fi and David Jones all finished lower between 0.5% and 3%, with Woolworths also lower by 0.3%. Harvey Norman and Wesfarmers bucked the negative trend to close higher by 1.7% and 0.5% respectively.

All that said, there is little doubt the market is trading with a "bring on Christmas" mentality.

Prices are in AUD unless otherwise stated.
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