Australian Stock Market- MIDDAY- 10/04/2011

MIDDAY REPORT
(12.30pm AEDT)

The Australian sharemarket is continuing to fall after a tough start to the new trading week yesterday. The ASX 200 index (XJO) is down 0.4 pct or 17.1 pts to 3879.9 while the broader All Ordinaries index (XAO) is 0.5 pct or 18.9 pts lower to 3941.8.

The S&P/ASX 200 Materials index is up 0.35 pct or 39 pts to 10531.5, with strong gains in the gold sector today. Australia's largest gold producer, Newcrest Mining (NCM) is up 2.62 pct or 88 cents to $34.44. Index leader, BHP Billiton (BHP) is down 0.15 pct or 6 cents to $34.09 while RIO Tinto (RIO) is 0.17 pct or 10 cents lower to $59.20.

The S&P/ASX 200 Financials index is down 0.4 pct or 14.8 pts to 3648. ANZ Banking Group (ANZ) is up 0.74 pct or 15 cents to $19.09 while Commonwealth Bank of Australia (CBA) is up by a modest 0.07 pct. National Australia Bank (NAB) is 1.06 pct or 24 cents lower to $21.40 while Westpac (WBC) is 0.26 pct or 5 cents weaker to $19.47.

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Shares in David Jones (DJS) are down 5.94 pct or 18 cents to $2.85 after going ex-dividend for its 15 cent a share distribution to shareholders. This means you would have had to purchase DJS shares no later than yesterday and held the shares up until at least today to be eligible for the payment.

AMR Corp (AMR;us), which is the parent company of American Airlines fell by 33 pct overnight due to bankruptcy fears. Despite the substantial pullback in its share price, American Airlines is the only large U.S carrier to not have filed for Chapter 11 bankruptcy over the past decade. This also comes less than a week after the Australian competition watchdog (the ACCC) approved a deal between both American Airlines and Qantas (QAN). QAN shares are holding up well, up 1.09 pct or 1.5 cent to $1.39.

Overnight, major global markets fell in the order of 2 pct with the U.S Dow Jones index slumping by 2.3 pct. The S&P 500 index dipped below the 1100 pt mark for the first time in a year. This index is a measure of how America's 500 largest companies are performing. As a side note, due to daylight savings, both the European and American markets are opening and closing one hour later than usual (AEDT).

Interestingly, the U.S markets actually improved by around 0.5 pct at one point overnight following a better than expected report on the American manufacturing sector. Unfortunately the gains were short lived with the market choosing to quickly shift its focus to concerns of the global economy.

Today will be an important day for Tim Cook, Apple's (AAPL;us) new Chief Executive Officer (CEO) as he is expected to unveil the next generation of the ever popular iPhone today. More than 100 million iPhones have been sold to data across the globe. Apple shares closed 1.7 pct lower overnight.

It will be a busy day of economic releases, with Australia's trade balance and building approvals released this morning while the Reserve Bank of Australia's (RBA) decision on interest rates will be out this afternoon at 2.30pm (AEDT). The trade balance shows the difference between imported and exported goods and services while building approvals show the number of approvals to construct properties granted to developers by councils.

Australia's trade surplus came in better than expected at $3.1 billion, making it the biggest surplus in 14 months. Building approvals rose by a staggering 11.4 pct in August, around 11 pct higher than consensus (market expectations). It is important to remember that approvals tend to be quite volatile from month to month and have fallen by more than 10 pct over the past three months (not including the gains in this report).

The market is expecting the RBA to remain on the interest rate sidelines for the 11th straight month this afternoon, keep rates at 4.75 pct. The RBA finds itself in a strong position compared to most other advanced economies as it still has room to cut rates if the economic climate worsens. Rates in both the U.S and Japan are at literally zero, rates in the U.K are at 0.5 pct while the European Central Bank (ECB) has rates at 1.5 pct.

All eyes will be on the RBA's accompanying statement for hints into its stance on interest rates and the possibility of future rate cuts.

Following the start of daylight savings over the weekend, major Asian markets will be trading between the hours mentioned below until April next year (note that over the next month, some of the times might slightly off due to several countries in the region changing their clocks at differing periods ).

The Hong Kong sharemarket trades in two sessions each day and will now open for trade between 1pm (AEDT) and 3.30pm (AEDT) while the second session is between 5.30pm (AEDT) and 7pm (AEDT).

Out of Japan, the first session will be between 11am (AEDT) and 1pm (AEDT) while the second session is between 2.30pm (AEDT) and 5pm (AEDT).

The Singapore exchange will be open for trade between 12pm (AEDT) and 3.30pm (AEDT) for the first session and then between 5pm (AEDT) and 8pm (AEDT) for the second.

The Chinese sharemarket is closed for business once again due to the Golden Week public holidays.

Shares in the region are pulling back substantially with South Korea's KOSPI index the worst, down 5.74 pct or 101.5 pts to 1668.15. Keep in mind that South Korea's sharemarket was closed yesterday due to a public holidays and is placing catch-up. Japan's Nikkei 225 index is down 1.9 pct or 162.57 pts to 8382.91.

Activity on the market has picked up after yesterday's quiet start to the week. So far today, 1.18 billion shares have been traded worth $2.52 billion. 254 shares are up 580 are lower and 318 are currently unchanged.

The Australian dollar (AUD) buys US95.3 cents, which is an entire 4 cents less against the greenback than this time last week. The AUD is the world's fifth most traded currency behind the U.S dollar, Euro, Japanese Yen and British Pound. The AUD accounts for around 7 pct of all foreign exchange trades.

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