Australian Stock Market Report – Afternoon December 22, 2014

Traders work on the floor of the New York Stock Exchange shortly after the market's opening in New York July 28, 2014. REUTERS/Lucas Jackson

 Australian shares improved for the fourth straight day with the ASX 200 Index up 1.9 per cent and finishing near intraday highs. Generally markets are quiet as we approach Christmas; however a surge in oil and iron ore prices on Friday have helped both energy and mining industries gain strongly.

 Fairfax Media (FXJ) rose by 1.8 are announcing a merger between the Macquarie and Fairfax radio networks; bringing both businesses together. FXJ is expected to receive $18m in cash from the transaction and a 54.5 per cent shareholding in an enlarged Macquarie Radio Network (MRN). The merger still requires investor and regulatory approval. MRN is behind 2GB and 2CH while FXJ owns well-known brands like 2UE, 3AW and Magic 1278 in Melbourne.

 Kathmandu (KMD) slumped by 21.6 per cent after warning that gross profit earned in the pre-Christmas Day trading period will be significantly less than this time last year due to a subdued start to its Christmas sale promotion and reduced margins.

 Energy stocks were the best improvers thanks to a 4.5 per cent surge in oil prices on Friday night. The impact of short traders locking in profits is perhaps a driver of the sector's strength.

 Mining companies rose by 2.6 per cent following a 2.2 per cent rise in iron ore prices. Gains from BHP Billiton (BHP), Rio Tinto (RIO) and Fortescue Metals (FMG) accounted for 13.3 pts of the ASX 200's 103.4 pt improvement.

 Volume was average with 1.9bn shares traded worth $4.8bn. 619 stocks are up, 281 fell and 300 were unchanged.

 The Australian dollar still trades around a 4.5 year low against the greenback, buying US$0.816, €0.666, ¥97.5 and £0.522.

 Petrol prices fell by 4.0 cents per litre to a 4-year low of 128.4 cents last week. The fall in the national average petrol price over the last month was the most significant for an equivalent period in 6 years. CommSec economist Craig James said that the fall in the petrol price is acting like a de-facto rate cut. The $32 fall in the cost of petrol for the average household is equivalent to a quarter per cent rate cut on a $200,000 mortgage."

 Commonwealth Bank's Business Sales Indicator (BSI) fell by 0.3 per cent in November - dragged down by weakness in government spending. Sales in retail stores have jumped by 0.6 per cent. CommSec economist Craig James said that "The latest Business Sales Index is in line with the anecdotal evidence from retailers that consumers have left Christmas shopping a little later this year. But the indications are that sales activity has picked up pace in the last week. Momentum is healthy ahead of the next three pivotal days for retailers."

 Tonight, an update on European consumer confidence will be issued together with US existing home sales.

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