RTTNews - The Australian market opened on a firm note Friday on strong overnight cues from Wall Street where stocks moved up sharply on some impressive economic and earnings reports. Higher commodity prices are also contributing to the buoyancy in the market. Energy, materials and financial stocks are trading firm while consumer staples, telecommunications and utilities are exhibiting weakness.

The Australian benchmark index S&P/ASX 200 is trading at 4,231.8, up 41.4 points or 1% over its previous close. The broader All Ordinaries index is up by 42.2 points or 1% at 4,238.1.

On Thursday, encouraging data on residential building approvals in June and an optimistic view from Citigroup's analyst about the outlook for major banks had lifted the key Australian indices to a healthy close. While the S&P/ASX 200 index ended at 4,190, recording a gain of 47.60 points or 1.15%, the All Ordinaries index closed with a gain of 47 points or 1.13% at 4,196.

Bank stocks are trading firm. ANZ Bank, Commonwealth Bank of Australia, National Australia Bank and Westpac Banking Corporation are up by 1%-2.5%.

Materials majors Rio Tinto and BHP Billiton are trading stronger by 3% and 1.7% respectively. Fortescue Metals, Onesteel and Bluescope steel are also trading sharply higher.
Energy major Woodside Petroleum is up by about 2%, while Santos is trading modestly higher.

Origin Energy Ltd says it achieved record production and sales in 2008/09, despite a fall in production in the fourth quarter. Annual production from Origin's Exploration and Production business increased by 4% to 104 petajoules equivalent, while sales revenue increased by 10% to A$572 million.

Compared with the June 2008 quarter, production and sales revenue were 15% and 6% lower respectively due to the Australia Pacific LNG transaction, which diluted Origin's interest in CSG-producing assets by 50%. Sales revenue for the quarter fell by 6% from the prior-year corresponding period, from A$144 million to A$135 million. But sales increased by 13% from A$120 million in the March 2009 quarter.

Production for the June quarter dropped 15% from the prior-year corresponding period to 25 Pje from 29.4 PJe. Origin said production of 25 PJe for the June 2009 quarter 2009 was 3.5 PJe or 16% higher than the March 2009 quarter as a result of higher seasonal contributions from the Otway Gas Project and continuing growth in CSG production. The Origin Energy stock is currently trading with a modest gain.

Shares of Elders Ltd soared this morning following an announcement from the company that it will sell its entire insurance business and place over 100 million of its shares to QBE Insurance Group Ltd for A$315 million.

The two companies have signed a heads of agreement for the transaction, which will also see QBE acquire 75% of a managing the general insurance agency, responsible for the long-term distribution of products through the Elders Rural Services Network. The proceeds of the transaction with QBE will be used to strengthen Elders' balance sheet, the company said. Under the share placement, QBE will acquire 112.5 million Elders shares, or 12.1% of Elders' issued equity, at a price of 40 Australian cents each. The Elders stock is up by as much as 42% now, while QBI Insurance Group is trading up by around 1%.

Energy Resources of Australia Ltd, an exporter of uranium oxide to nuclear utilities in Asia, Europe and North America, posted a record first-half net profit, thanks to higher production and sales of uranium oxide. The firm's net profit for the six months to June 30 rose to A$127.6 million from A$38.9 million in the prior year's corresponding period. The company has also forecast higher revenues for the full year. The stock is trading nearly 2% up over its previous close.

In economic news, the TD Securities-Melbourne Institute inflation gauge rose 0.9% in July, the biggest monthly rise in the history of the report. According to the report, higher communications charges, as well as the cost of utilities and other housing, contributed most to the July result. The inflation gauge rose 1.9% in the 12 months to July, just below the Reserve Bank of Australia's 2%-3% target range for consumer price inflation.

In the currency market, the Australian dollar opened higher, bolstered by strong equity markets and higher commodity prices. In early trading this morning, the Aussie was quoting at US$0.8257/60, up from Thursday's close of US$0.8225/28 following rallies on world stock markets and soaring commodity prices. Currently, the Australian dollar is trading at 0.8271 to the U.S. dollar.

Among other markets in the Asia-Pacific region, Japan, New Zealand and Taiwan are trading sharply higher with their benchmark indices gaining 1.25%-1.5%. Singapore and Korea are also trading with notable gains. Shanghai is trading flat.

On Wall Street, stocks posted strong gains on Thursday, fueled by stabilizing earnings and employment figures. Despite some profit taking in the final hour, the major averages closed at their best levels of the year.

Early buying interest was generated as traders reacted positively to the latest earnings and economic data, including the Labor Department's report on first-time claims for unemployment benefits in the week ended July 25th.

Equities saw some modest upside after the results of the Treasury Department's US$28.0 billion sale of seven-year notes showed that the auction attracted stronger than expected demand. The sale drew a high-yield of 3.369%, while the bid-to-cover ratio came in at 2.63.

The Dow finished up by 83.74 points or 0.9% at 9,154.46, the Nasdaq advanced by 16.54 points or 0.8% to 1,984.30 and the S&P 500 rose by 11.60 points or 1.2% to 986.75.

Stock markets across the Asia-Pacific region had finished largely on the upside on Thursday. Hong Kong's Hang Seng index and Japan's benchmark Nikkei index both rose by 0.5%.

Major European markets closed notably higher, with the French CAC 40 index and the German DAX index finishing up by 1.7% and 2.1% respectively, while the U.K.'s FTSE 100 index rose by 1.9%.

Crude oil surged higher on Thursday as traders bet a recent plunge was overdone. The one-day gain was the largest since April. Light sweet crude for September delivery rallied to US$66.92 per barrel, up US$3.57 on the session. Prices touched as high as US$67.29, approaching the week's high crossing of US$68.99.

For comments and feedback: contact editorial@rttnews.com