Australian sharemarket rallies on positive overseas leads

The Australian sharemarket has followed positive overseas leads and is trading 2.2% higher in early trade.

OptionsXpress market analyst Ben Le Brun said the Australian market is “behind the eight ball this week, so we have plenty of ground to make up.”

“US housing starts rose to an 18 month high overnight and permits for future construction also rose strongly. Interestingly, the data out of the US has been largely ignored by markets in recent times.”

“The thorn in the side of global markets has been Europe. Investors have been singing the final countdown for over six months now. Last night we saw a successful Spanish bond auction, with Spain’s short-term borrowing costs falling sharply. That was coupled with Italian 10 year bond yields falling.”

“We also heard about the European Central Bank inviting euro banks to place orders for its first tranche of unlimited three year loans. This is an attempt to keep credit flowing to the 17 nation economy during the sovereign debt crisis. The final ingredient in the Eurozone mix overnight was the better than expected business sentiment figures in Germany.”

At just before 11.30, the S&P/ASX200 was up 2.22% to 4156, and the All Ordinaries index was up 2.14% to 4194.9.

Economic growth expectations weaken: Index

Economic growth expectations have weakened, although annual growth remains above trend, according to the Westpac-Melbourne Institute Leading Index.

The index, which measures the likely pace of economic activity three to nine months into the future, fell to 2.6% in October – versus Westpac’s 3% growth target for 2012.

The annualised growth rate of the coincident index was 3.5%, above its long-term trend of 3.2%.

Westpac chief economist Bill Evans said in a statement that “with prospects for Europe steadily deteriorating and the interest rate sensitive parts of the economy remaining weak, we believe there is ample scope for a further rate cut in February.”

Westpac announces new director

Robert Elstone, whose career has spanned the Future Fund, leading the ASX and holding company for the Sydney Future Exchange, and Air New Zealand, will join the Westpac board.

Westpac chairman Lindsay Maxsteed said Elstone’s extensive background in capital markets and proven track record in leadership roles will further strengthen the bank’s board.

He will serve as an independent non-executive director from February 2012.

ACMA warns Vodafone on privacy breach

The Australian Communications and Media Authority has put Vodafone on notice regarding the incident earlier this year when customer details were leaked.

The authority has said the company must comply with the consumer protections code or face fines of up to $250,000.

“These directions are intended to make sure Vodafone remains focused on improving outcomes for its consumers by increasing the regulatory consequences of any further breach,” ACMA chairman Chris Chapman said in a statement.

An investigation by ACMA found Vodafone did not properly classify complaints.

Chief executive Nigel Dews has said the firm has already taken action on the issues referenced by ACMA.

“We have supported the ACMA throughout their thorough and lengthy assessment, and while we respect the ACMA’s view of past events, we haven’t waited for their report to tell us what we’ve needed to do,” he said.