ASX CLOSE: Market finishes at an 11-month closing high

Thursday 10th September 2009

Across Asia, markets were all higher this Thursday as investors attention turned towards upcoming company reports and the likelihood for significant upgrades. Overnight leads also boosted sentiment. The Nikkei 225 and Kospi closed 1.9% and 2.3% higher respectively while in those market still trading, the Shanghai Composite and Hang Seng are up 0.2% and 2.1%.

In Australia, the S&P/ASX 200 finished 1.1% higher at 4570.8, a fresh 11-month closing high after shrugging off larger-than-expected job losses. The economy lost 27,100 jobs in August versus an expected fall of only 15,000. However, the unemployment rate remained steady at 5.8% when it was expected to rise to 5.9%. While it looks like businesses are still cutting jobs, they're doing their best to offer employees part-time solutions.

The data sapped a bit of market confidence shortly after the release, but overall, it still managed to brush off the ‘September doomsayers' with a powerful afternoon rally.

The last two days worth of below-consensus economic data has dealt a severe blow to interest-rate bulls. An October rate hike looks highly unlikely now.

To see buyers bidding stocks up in the afternoon session was very encouraging indeed. It certainly looks like the professionals ‘closed' the market. The close above yesterday's high of 4554 has confirmed a technical breakout to the upside. Short-to-medium term targets are now towards the 4700 - 4750 resistance levels from July / August 2008.

Gains were broad based today with all sectors finishing in positive territory. The property trusts (2.7%), consumer discretionary (1.9%), energy (1.7%), industrials (1.6%), financials (1%) and materials (1%) sectors added the lion's share of points.

In the property trust sector, Lend Lease, Mirvac Group, Goodman Group, Stockland and Westfield Group were the major risers, all up between 2.8% and 5.4%. Interestingly, Goldman Sachs came out this morning with an update to their model portfolio. Broadly speaking, they increased their exposure to domestic cyclicals and metals and decreased exposure to the US dollar. Mirvac Group was one of their five largest overweight positions.

In the consumer discretionary space, the likes of Crown (4.2%), David Jones (4%), Harvey Norman (3.8%) and Fairfax Media (3.4%) contributed the bulk of the points.

Overnight, Crude Oil rose 0.3% for the fourth straight session as analysts predicted weekly petroleum data due tonight to show another drop in US crude stockpiles. Also, OPEC agreed to keep oil production levels unchanged and will rely on the global economic recovery to keep prices around current levels rather than supply cuts. Currently, Crude Oil for October delivery is trading at $72.33.

On the back of this, the energy sector traded higher with the likes Origin Energy, Santos and Woodside Petroleum all up between 2.1% and 3.5%.

Downer EDI (6.2%), Qantas (4.3%), United Group (3.8%) and Asciano (3.7%) were the biggest gainers among industrial names. Both Downer EDI and Qantas are rated a ‘buy' by Goldman Sachs. Qantas is also being helped by comments from Boeing overnight that the Asia Pacific region will represent the world's largest aviation market over the next 20 years. Long term, this bodes well for Qantas's further expansion plans into the region with Jetstar.

Elsewhere, the financials added points with the big four banks all rising, up between 0.5% and 1.4% with Commonwealth Bank of Australia the top performer. Leads from offshore were positive with the S&P Financials sector and the KBW Bank index both up 1.4% overnight.

Bluescope Steel and Orica were the biggest movers among materials stocks, up 4.7% and 4.1%, respectively. Rio Tinto and BHP Billiton were up 1.1% and 0.8% respectively.

Prices are in AUD unless otherwise stated.
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