ASX CLOSE: All sectors close in positive territory

Friday 11th December 2009

Across Asia, all regional markets are trading higher as they digest better-than-expected industrial production numbers out of China, a drop in US jobless claims and the confidence boosting impact of Australia's stellar employment numbers from yesterday. The Nikkei 225 is the regions best performing market, up 2%, while the Hang Seng is higher by 1.6%. The Shanghai Composite and the Kospi are seeing more moderate gains, both higher by 0.3%.

Well another trading day is in the books with the Australian market closing out the final session of the week higher by 0.6% at 4635.2 but well off its intraday high of 4646. On the week the ASX 200 gave up 1.4%.

The big question as we headed into Friday afternoon was would we be able to maintain these gains. So often over the last few weeks we have seen our market rollover and give back any advances it was seeing, suggesting a real lack of buying conviction and a reluctance to let profits run. This is certainly not characteristic of a bull market which some have suggested we are in after our 50% plus move since March. Still, it has been that sort of year. Who could blame investors and traders alike for being a little hesitant heading into year end? With the financial crisis not long in the rear vision mirror and the odd live landmine such as the Dubai debt crisis still a threat, you can see why investors are just looking for the finishing line for 2009.

In trading action today we saw broad based gains for our market with all sectors closing in positive territory.

Not surprisingly the consumer discretionary sector was a standout performer finishing higher by 1.3%, buoyed on by a strong performance from retailers in the US and yesterday's better-than-expected employment number which saw the official unemployment rate surprisingly fall to 5.7%.

Three consecutive months of robust jobs creation has clearly helped the Australian consumer absorb the RBA's interest rate hikes (and the extra stomach punches thrown by a few of our banks) as well as giving them the confidence to open their wallets for the Christmas shopping season. Just how merry the consumer is will be revealed in good time when retailers report their Christmas takings early next year. Major retailers JB Hi-Fi, David Jones and Myer all enjoyed strong buying interest finishing higher between 0.8% and 1.%, with Harvey Norman being the standout performer, up 3.5%.

The materials sector enjoyed some buying interest today, closing higher by 1.3%, having been a laggard for most of the week. It was good to see the sector back in the winners' circle having been beaten up for most of the week on premature speculation about rising interest rates in the US by mid 2010. Since the much better-than-expected non-farm payrolls report last week the USD has seen some strength with commodity prices and materials bearing the brunt of the backlash.

Fears of an unwind of the USD funded carry trade would appear to be grossly exaggerated in our view. Whether or not the sector can regain enough momentum to lead a late Santa Claus rally is highly debatable.

That said, today the heavyweight miners were back on investors' radars with BHP and Rio Tinto higher by 1.4% and 0.5% respectively, while gold miners also saw some buying interest with spot gold halting its 4 day pullback to be trading back above US$1130oz. Lihir Gold closed out the day higher by 1.6% while Newcrest Mining firmed by 0.5%.

The energy sector managed to finish in positive territory by 0.2% but was still a relative underperformer on the session. Energy names continued to struggle with the price of crude falling 0.2% overnight, but it firmed slightly in the Asian session to be trading at US$70.80/b. Major names Oil Search, and Caltex were weaker by 1.8% and 1.9% respectively while Woodside managed to finish in the green by 0.2%

Despite mixed leads from offshore markets, the financial sector advanced 0.2%. Performance across the Big-4 banks was mixed with National Australia Bank higher by 0.75%, Commonwealth Bank, flat, while Westpac and ANZ were weaker by 0.8% and 0.9%. Macquarie Bank enjoyed a solid session to be higher by 2.1% while regional banks Bendigo Bank and Suncorp-Metway closed stronger by 1% and 2.2% respectively.

Earlier this afternoon we had the release of China's monthly economic data, providing the latest reads on industrial production, retail sales, fixed asset investment, CPI and new loans. Industrial production numbers were slightly stronger than expected at 19.2% growth y/y while fixed asset investment was marginally weaker than expected by still a very robust 32.1% y/y growth.

Prices are in AUD unless otherwise stated.
IG Markets Ltd, Australian Financial Service Licence No. 220440. ABN 84 099 019 851.
This information is provided for information purposes and should not be regarded as financial product advice. This information does not take into account your specific objectives, financial situation or needs. Therefore you should consider the information in light of your specific objectives, situation or needs before making any trading or investment decision. IG Markets recommends you take independent financial advice before any decision whether to trade with IG Markets in the products we offer.

Comments from our readers

No comments yet