IG Markets Australian Market Wrap

The property trusts and materials stocks added the majority of points, with the miners boosted by strong leads from base metals.

The big money is more than happy on the sideline, especially ahead US non-farm payrolls tonight and Independence Day holiday on Friday.

Barring any compelling economic data, expect markets to be relatively subdued until we get into the bulk of the US second quarter reporting season it begins on the 7th with Alcoa.

The market drew confidence from confirmation Chinalco took up the Rio Tinto rights issue. A sale of their 9% stake would have certainly weighed on the price. This indicates that the Chinese see this stake as a good investment. They are the best qualified when it comes to assessing Chinese growth and demand for Australia's raw resource exports".

The S&P/ASX 200 index finished 0.1% higher at 3877 after trading as high as 3910 this morning.

In economic news, Australia's trade balance deteriorated in May to a deficit of $556 million as exports slumped 5%. Economists had been expecting a deficit of $175 million in May. The worse-than-expected deficit shows that our economy is not out of the woods yet and the global recession is beginning to hit export incomes. However, the continual improvement in economic data from our major trading partners is encouraging.

Leading the market higher were the property trust (2.8%), materials (0.9%) and financials (0.1%) sectors.

The property trusts were stronger on the back of bullish leads from the US. GPT Group (5.3%), Goodman Group (5.3%), Stockland Group (4.2%), ING Office Fund (4.6%), Westfield Group (2.7%) and Lend Lease (2.3%) added the most points.

GPT Group this morning reported that it had received a put option exercise notice in relation to the Besen retailing family's 16.7% stake in Highpoint Shopping Centre. GPT has capacity under existing funding facilities to undertake the acquisition. Michael Cameron, GPT's chief executive said "as one of Australia's best regional shopping centres, the acquisition of a further share of Highpoint is a great fit with our strategy and enhances our exposure to the ownership of high quality Australian real estate".

In the materials sector, the big miners were the major gainers with Newcrest Mining (3%), Alumina (2.5%), Lihir Gold (1.7%), BHP Billiton (1.2%) and Rio Tinto (0.3%) the standout performers. The leads from London were positive with Rio Tinto and BHP Billiton both rising 2.5%. On the London Metals Exchange, base metals were all higher with Copper gaining 2.4%, Zinc 2.6%, Nickel 7.5% and Aluminium 2%.

Gold had a good night, rising back above the $940 per ounce as the US dollar fell against the euro following a report showing further contraction in US private sector jobs.

Elsewhere in the sector, Extract Resources (0.6%), last financial years top performing stock (407.8%), upgraded the resource at its first zone of its Rossing South uranium prospect in Namibia by about a third, confirming the venture as one of the world's most significant uranium discoveries. The upgrade was largely expected with takeover speculation rampant for the Perth-based miner.

In the financials space, Macquarie Group and Bendigo Bank lead the way, both up 1.5%. The big four banks were mixed. National Australia Bank was the only gainer, up 0.7% while Commonwealth Bank of Australia, ANZ and Westpac Banking Corporation finished in the red, down 1.8%, 0.7% and 0.5% respectively. Leads from the US were slightly weaker with the KBW Bank Index losing 0.7%.