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Market Update

Third Monthly Decline in Australian Deficit, Commonwealth Bank Net Soars

Author: Marcus Jacob
Last Update: 9:55 AM ET November 06 2013

4:30 PM Sydney Australian trade deficit declined for the third month in a row and iron ore and other resources sector recorded a steady rise in price and volume. Exports to China barely increased but iron ore exports to fast growing nation advanced more than expected. Commonwealth Bank net soared.

Australian market indexes dropped the low of the day after thirty minutes of trading and staged a steady recovery in the session and closed up.

Australian trade deficit improved for the third month in a row after iron ore exports jumped and record exports to China are likely to swing the balance to surplus next year.

Australian Deficit Declines

The Australian Bureau of Statistics reported trade deficit narrowed more than expected in September to $284 million. Exports in September were flat and imports fell 1%.

August deficit was revised lower to $693 million and July deficit was $1.4 billion.

Exports of metals, minerals and ores increased for the third month in a row and gained 5.7% in September.

Exports to China increased $7 million to a record of $8.65 billion and its share of total exports increased to a record 38%. Exports to Japan, the second largest market with 18% share, declined $382 million.

Total of 7% were to Korea and 3% to India.

Service sector exports was relatively flat, and tourism receipts in the month declined $13 million and service trade balance improved $30 million.

Australian dollar gained to 95.17 U.S. cents. In stock trading, turnover jumped to 733 million shares worth $4.5 billion.

The ASX 200 index rose 1.80 to close at 5,433.80 and the broader All Ordinaries closed edged up 0.30 to 5,426.

Stocks in Review

Rio Tinto climbed 90 cents to $65.60 and BHP jumped 24 cents to $38.09. Woodside Petroleum Limited closed unchanged at $39.35.

Westpac rose 4 cents to $34.39.

AMP Limited fell 1.1% to $4.66 after the wealth management services provider plans to raise $200 million through an offering of unsecured debt securities.

Commonwealth Bank of Australia increased 1.3% to $77.96 after the lender reported net profit in the first- quarter ending in September surged 14% to $2.1 billion from $1.8 billion in the same quarter a year ago. The bank net interest margin was slightly lower than the last six months.

In the quarter, the bank reserved $228 million for bad debt compared to $291 million in a year earlier quarter.

GrainCorp Limited gained 1.1% to $12.20 after the grain supply chain received a takeover offer from U.S.-based Archer Daniels Midland Co for $3 billion. The company faces political and grower opposition in Australia that the deal could handover the control of Australia''s grains industry to foreign interests.

Downer EDI Limited slipped 1.7% to $5.19 after the engineering and maintenance firm reiterated its full-year profit flat profit outlook as its rail business takes time to adjust to the mining sector slowdown.

National Australia Bank Limited rose 0.3% to $35.89 and the lender is set to launch a $500 million hybrid offer to support tier-one capital before global regulatory standard Basel III is rolled out.

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