Australian Stock Market Report – Midday 10/12/2011

MIDDAY REPORT (12pm AEDT)

The Australian sharemarket is pulling back for the first time this week, with the All Ordinaries index (XAO) down 1 pct or 42.2 pts to 4246.6. Most sectors are lower, with the miners the worst performers in percentage terms.

It is important to remind ourselves that the Aussie market has gained for five straight days, rising by 9 pct in the process. Since January 2011, Australian shares have dropped by 10 pct.

Our mining sector is currently the biggest loser of the session, with BHP Billiton (BHP) down 2.09 pct or 78 cents to $36.61 while diversified mining giant, RIO Tinto (RIO) is down 2.21 pct or $1.50 to $66.50. Australia's largest gold producer and the world's fifth biggest, Newcrest Mining (NCM) is down 2.31 pct or 84 cents to $35.56.

The banks were mixed in early trade but have now all turned negative. Westpac (WBC) is down 1.46 pct or 31 cents to $21.60, ANZ Banking Group (ANZ) is down 1.18 pct or 25 cents to $20.95, National Australia Bank (NAB) is down 0.5 pct or 12 cents to $24.09 while Commonwealth Bank of Australia (CBA) is 0.28 pct or 13 cents lower to $47.12.

The retailers are losing ground also, with both Myer (MYR) and JB Hi-Fi (JBH) down 1.3 pct, while department store owner David Jones (DJS) is off by a more substantial 2.94 pct or 9 cents to $2.97.

Retailers, JB Hi-Fi (JBH) and The Reject Shop (TRS) are holding their Annual General Meetings (AGMs) today.

It will be a big day for economic data today, with the latest consumer confidence survey results, housing lending (the number of loans issued to Australians) and credit card statistics all released today.

The latest consumer confidence report has shown that Australians are feeling a little better about both the economy and their finances this month compared to September.

Overnight, Slovakia delayed its vote on the expansion of the European Financial Stability Facilities' (EFSF) powers. Slovakia is the last Eurozone nation holding back progress in relation to the EFSF.

Standard and Poor's (S&P) downgraded Spain's banking sector overnight. The ratings agency has said that the economic uncertainty in Europe will likely hurt the Spanish banks over the next year and a half. The industry's risk rating rose from 3 to 4, where a rating of 10 is the worst rating.

Overnight, Troika left Athens and made it quite clear that Greece will receive its next tranche of its bailout package. This is expected to be made available to the Greeks by early November. Troika is a group made up of the International Monetary Fund (IMF), the European Central Bank (ECB) and the European Commission. The organisation indicated that that Greece needs to increase spending cuts and austerity measures in 2012 and 2103. The Greeks have been carrying out significant strikes over the past several months with doctors, bus, tram and train drivers all walking off the job.

The earnings season for the third quarter (July to September) has kicked off in the U.S this morning. The world's third largest aluminium producer, Alcoa (AA;us) fell short of its profit expectations at $172 million or 15 cents a share. Despite posting a much better result than last year (profit doubled), stocks pulled back in after hours trading following the lower than forecast earnings result.

Over the next few days, investment bank JP Morgan & Chase (JPM;us) and internet giant, Google (GOOG;us)

Following the start of daylight savings at the start of October, 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.

Asian markets are mixed at lunch, with Japan's Nikkei 225 index down 0.76 pct or 66.4 pts to 8707.28 while South Korea's KOSPI index is 0.52 pct or 9.29 pts lower to 1785.73.

So far in trade at lunch, 622 million shares have been traded worth $1.53 billion. 252 shares are up, 426 are lower and 322 are currently unchanged.

The Australian dollar (AUD) is still flirting with parity against the US dollar and currently buys US99.4 cents.

The AUD is the world's fifth most traded currency behind the U.S dollar, the Euro, Japanese Yen and British Pound. The AUD accounts for around 7 pct of all foreign exchange trades.

[Kick off your trading day with our newsletter]