The Australian share market came off the day’s highs to close 0.3 per cent higher, with investors content to keep their powder dry ahead of the US Federal Reserve’s two day meeting which is set to commence overnight. Consumer Staples led the way for the major sectors, while Joe Hockey informed the nation that the federal budget is not expected to return to surplus before fiscal 2017.
The S&P/ASX 200 index closed 14 points up to finish at 5,103. The value of trades was $3.9 billion on volume of 713 million shares at the close of trade. The top three stocks by value were Commonwealth Bank of Australia
(ASX:CBA), BHP Billiton Limited
(ASX:BHP) and Westpac Banking Corporation
(ASX:WBC).
On the futures market the SPI is flat.
Economic news
The Reserve Bank of Australia (RBA) again repeated its concerns that the Australian dollar remains uncomfortably high, despite its recent falls, in the minutes of its December meeting. The central bank said the currency had "depreciated noticeably" over the past month, however a lower exchange rate would likely be needed to achieve balanced growth in the economy. The board said it saw further signs of the stimulatory effects of low interest rates, most notably in the housing market, and additional effects were still likely to be coming through.
Australia's federal deficit will almost tip $50 billion in 2013/14 and the commonwealth budget will not return to surplus before fiscal 2017, according to the government's Mid-Year Economic and Fiscal Outlook (MYEFO). Treasurer Joe Hockey says the federal deficit for 2013/14 is expected to be $47 billion, before narrowing to $33.9 in 2014/15. The May budget, released by the former Labor government under Prime Minister Julia Gillard and Treasurer Wayne Swan, expected the 2013/14 deficit would be $18 billion.
Company news
BHP Billiton Limited
(ASX:BHP) will cut as many as 200 jobs after suspending mining at its Nickel West Leinster Perseverance Underground mine in Western Australia due to safety concerns. The miner says it will try to redeploy employees before announcing a total number of redundancies, and will continue to operate its processing facilities at Leinster and maintain the underground infrastructure in Perseverance mine. Shares in BHP closed flat at $35.66.
Watpac Limited
(ASX:WTP) has been awarded a $350 million contract to build ten new schools in Queensland. The works program, undertaken for the Queensland Government, will commence in January and is expected to take five years to complete. Shares in Watpac closed 3.49 per cent up at $0.89.
REA Group Limited
(ASX:REA) shares took a 6.88 per cent hit after the real estate classified service announced the departure of CEO Greg Ellis.
Insurance Australia Group Limited
(ASX:IAG) shares fell 5.26 per cent despite announcing it will buy the insurance underwriting business from Wesfarmers Limited
(ASX:WES) for $1.84 billion.
The battle for Warrnambool Cheese & Butter Factory Co.
(ASX:WCB) has hit $9.60 a share, after the Australian Takeovers Panel ordered Saputo to raise its bid for the milk processor.
APA Group
(ASX:APA) shares fell 3.62 per cent despite entering a scheme of arrangement to take full control of Envestra Limited
(ASX:ENV), making a sweetened bid that values the pipeline operator at $2.2 billion.
Best and worst performers
The best performing sector was Consumer staples adding 126 points to close at 9,688.
The worst performing sector was Utilities, losing 41 points to close at 5,307.
The best performing stock in the S&PASX 200 was Forge Group Limited
(ASX:FGE), rising 17.76 per cent to close at $0.63. Shares in Boart Longyear Limited
(ASX:BLY) and Envestra Limited
(ASX:ENV) also closed higher.
The worst performing stock was REA Group Limited
(ASX:REA), dropping 6.88 per cent to close at $37.74. Shares in Insurance Australia Group Limited
(ASX:IAG) and St. Barbara Limited
(ASX:SBM) also closed lower.
IPOs GDI Property Group Limited
(ASX:GDI) started trading today. The property investment manager floated with an issue price of $1.00, opened at $0.95 and a closed at $0.88.
Pact Group Holdings Limited
(ASX:COM) started trading today. The packaging company floated with an issue price of $3.80, opened at $3.50 and a closed at $3.32.
Commodities
Gold is trading at $US1,242 an ounce. Light crude is $0.88 up at $US97.48 a barrel.
The Australian dollar
The Australian dollar is buying $US0.8943.
