Australian Stocks: What Happened Today?

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By Greg Peel (Max Ludowici is visiting clients this afternoon.) 

The ASX 200 closed down 3 points to 4580. The Aussie dollar has slipped a little to US$1.0542.

It was a dull beginning to the week on the local bourse, with the ASX 200 fluctuating between 3 points up and 14 points down. We have entered the final week of trading before Christmas, kids are on holidays, offices have begun to empty, and those remaining are finding other seasonal distractions. Aside from expiry day on Thursday, or barring any significant development in US cliff discussions, this may just be the way of things for the week.

Speaking of cliff discussions, the Australian market was provided with a possible excuse to be more positive today given the Republicans' offer over the weekend to countenance a level of tax increases in the US in exchange for entitlement cuts. This represented the first blink from the previously unmoved GOP on the tax front. But entitlements are another kettle of fish, and Bridge Street seems to have decided not to preempt those unpredictable American politicians. It is also possible the tragedy in the US over the weekend might bring cliff discussions to a temporary halt out of respect.

The Japanese election result over the weekend was also another impetus, given the new government's promise to pump is much yen into the system as is necessary. This is potentially positive for commodities, and we must not forget Japan is still a major trading partner. The result was very much expected, however.

Not even another decent jump in the Chinese spot iron ore price, which is now threatening US$130/t, could spark up interest today. BHP Billiton ((BHP)) and Rio Tinto ((RIO)) both rose 1%, and a smallish asset sale helped Fortesuce Metals ((FMG)) up 3.8%, but general weakness in the big banks offered a counter.  Telcos were the most positive sector on the day following a 5c rise in Telstra ((TLS)) to $4.30.

In other stock news, Fairfax Media ((FXJ)) rose 1% after selling its remaining stake in NZ classified company Trade Me. Billabong ((BBG)) jumped 4.8% on news a former director has made an offer for the company.

There were no economic releases of any note today in a quiet economic week for Australia.

We await Wall Street's response tonight to the weekend's cliff developments. The Dow futures are up 28 points as of the Australian close.

(For a more comprehensive summary of last night’s market action see FNArena’s Overnight Report.)

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