Australian Stock Market Report - Midday

US sharemarkets rallied in the last hour of trade on Monday, shaking off investor uncertainty about holiday sales by retailers. The National Retail Federation said that Black Friday spending was down on a year ago, but comScore said online spending hit record highs. Shares in online retailer Amazon.com hit an all-time high in Monday´s session. At the close, the US Dow Jones index was up by 35points or 0.3pct with the S&P 500 up 0.4pct and NASDAQ was up 6 points or 0.3pct.

Today, the market started off slow opening slightly lower, volumes very with the main focus of the market being the outcome of the last Reserve Bank of Australia (RBA) interest rate decision of the year that will be handed down at 2.30pm (AEDT) today. The RBA has never lifted rates three times in row, but today we could see that record being broken. Our Cash rate stand at a very low 3.5pct and our economy and markets are recovering very well. As of the open of trade today the market is now factoring in a 78pct chance of a 25basis point or ¼pct rise today. Yesterday's strong economic data showing a data substantial rise house prices in the last month and higher inflation reading are likely to sway RBA towards a rise today. The Reserve Bank has become increasingly bullish on the economy, and we expect another 25bp or 0.25pct rise today.

At 11.15am, the All Ordinaries Index (XAO) off 2points or 0.03pct to 4,713.5, while the S&P/ASX 200 Index (XJO) also off 2points or 0.04pct to 4,699.2.

The S&P/ASX 200 Financials Index (XFJ) falling this morning after a good comeback yesterday. So far today the sub index is off 0.2pct. Shares in Westpac (WBC) off 0.6pct to $23.99, while the Commonwealth Bank (CBA), and is the only one of the big four banks to be in the green, up 0.9pct to $53.29, with National Australia Bank (NAB) off 0.5pct to $28.46.

Base metal prices posted solid gains on the London Metal Exchange on Monday. While the greenback strengthened, investors were heartened that there appears to be no contagion risk from Dubai´s financial woes. Zinc rose 4.2pct with other metals up around 2pct. The materials sector currently lower off 0.2pct, the major miners holding the index back today. BHP Billiton (BHP) shares, off 0.5pct to $41.07. Rio Tinto (RIO) off 0.8pct to $71.04.

The price of gold also rose, taking direction from oil and base metal markets. While there is speculation that Dubai may sell gold, China may also by a buyer according to a senior Chinese official. The Comex quote rose by US$6.80 an ounce to US$1,182.30. Shares in Newcrest Mining (NCM) moving higher this morning, up 1.8pct to $37.44, while Lihir Gold (LGL) was up 0.28pct to $3.61.

The energy sector higher in the morning session, US crude oil prices rose on Monday night in the states, reversing a large portion of Friday´s losses as investors became more comfortable about the situation in Dubai. The NYMEX crude oil contract rose by US$1.23 to US$77.28. Shares in Woodside Petroleum (WPL) up 0.08pct to $48.79 while Santos (STO) up 1pct to $14.86.

Among the retailers, Metcash (MTS) off 2.6pct to $4.56, even after releasing a strong profit result for the last six months. It profit coming in at $109.2 million, in line with expectations, and confirming its annual guidance of 7%-10% pre-abnormal earnings per share (EPS) helped by improving economic conditions. Investors had hoped Metcash would announce an upgrade to its expected EPS growth today so the shares are being sold off. Shares in Harvey Norman (HVN) up 1.4pct to $4.36. David Jones Limited (DJS) up 0.52pct to $5.79, and Myer Limited (MYR) up 1.6pct. Woolworths (WOW) shares up 0.6% to $28.22.

Telstra (TLS) shares higher in light trade up 1.5pct to $3.46.

The Australian dollar is higher ahead of the interest rate outcome at 11.15am AEDT 1 Aussie dollar is buying US91.77c and €61.04c.