Australian Stock Market Report – Midday 10/10/2012

LUNCHTIME REPORT
(1pm AEDT)

Local stocks have retreated from 14 month highs today, following a lacklustre session on US and European markets overnight. Wall Street eased into the red due to a lack of direction with no economic data released, and as investors showed nerves ahead of the start of the reporting season. At lunchtime in the East, the All Ordinaries Index (XAO) is down 13.6pts or 0.3pct to 4513.

The energy sector is one part of the market bucking the downward trend, up 0.2pct after the price of oil rose 3.5pct to above US$92 a barrel overnight. Healthcare stocks are also showing resilience on defensive buying, with CSL Limited (CSL) firmer by 1.1pct to $47.05 and Cochlear (COH) firmer by 1pct to $71.61.

The iron ore price rallied once again overnight, up about 6pct to US$117 a tonne. Rio Tinto (RIO) shares are adding to yesterday's gains, firmer by 0.2pct to $55.80 however Fortescue Metals Group (FMG) is being held back by profit takers after yesterday's strong rise. FMG shares are down 3.2pct to $3.825 however it's important to note they have risen 28pct since the 17th September.

After the bell on Wall Street, aluminium giant Alcoa released earnings which beat expectations. Alumina (AWC), which has a 40pct interest in Alcoa and is listed on the Australian share market, is firmer by 3pct to 90.25c at lunchtime in the East.

The Westpac Consumer Sentiment Index was released today, showing a 1pct improvement in our moods in the month of October. However the result is being labelled as disappointing with the index below the 100 point level separating the optimists from the pessimists for the eighth month in a row. Consumer sentiment came in at a reading of 99.2 in October, despite home owners receiving a rate cut last week.

The Australian dollar is buying US102.08c, £0.638 and €79.3c.

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