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Market Update

Australian Dollar Gains, Home Loan Approvals Fall

Author: Marcus Jacob
Last Update: 8:51 AM ET October 14 2013

4:35 PM Sydney – Australian stocks declined as world investors turned their focus to the U.S. political stalemate. In addition, China reported weaker than expected exports data and inflation picked up in September. Australian home loan approvals also fell.

Stocks in Sydney declined as nervous investors worried that the U.S. leaders are inching closer to a debt default.

World investors have largely ignored the current U.S. political stalemate but the U.S. government is scheduled to run out of money as early as October 17, leading to a technical default.

If politicians fail to resolve their differences, the U.S. government will have to prioritize its spending and they may lead to delays and cuts in government spending and drive the economy into a recession.

Chinese Exports Fall Short of Expectations, Inflation Picks Up

China reported a decline in exports in September. Overseas shipments declined 0.3% from a year ago and imports in the month rose 7.4% resulting in trade surplus of $15.2 billion.Trade surplus in August was $28.5 billion.

Exports growth to the U.S. declined to 4.2% from 6.1% in August and exports to South Korea, Taiwan and the European Union declined from a year ago.

However, the data may have been distorted by the holiday calendar this year and the government crackdown on over invoicing and higher than normal currency volatility.

China also said its foreign reserves jumped to $3.66 trillion in September from $3.5 trillion in June, the central bank said.

Separately, statistics bureau said consumer price index increased 3.1% in September and new loans increased to 787 billion renminbi or $129 billion. Money supply growth slowed to 14.2% and the broadest measure of credit aggregate financing decreased from a year ago to 1.4 trillion yen.

The ASX 200 index decreased 23 cents or 0.4% to close at 5,207.90 and All Ordinaries index declined 22.3 or 0.4% to 5,206.05.

In trading, 470 million shares changed hands worth $2.6 billion.

Australian dollar strengthened to 94.70 U.S. cents.

On the domestic front, home loans approved in August fell seasonally adjusted 3.9% to 49,912 and total financing declined 1.2% to $23.8 billion.

Stocks in Review

BHP Billiton declined 11 cents to $35.02, Rio Tinto fell 6 cents to $61.65 and OZ Minerals dropped 29 cents to $4.11.

Santos decreased 2% to $14.53 and Origin Energy eased 0.4% to $14.17.

iSelect, insurance comparison site, increased 10 cents to $1.36 after company’s chief executive resigned. Only four months ago he participated in the public offering of the company’s stock.

Banks participated in the market decline. ANZ decreased 15 cents to $31.41, National Australia Bank dived 11 cents to $34.76 and Westpac declined 4 cents to $32.95.

Commonwealth Bank gained 20 cents to close at $72.52.

Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc