Australian Stock Market Report – Midday 10/15/13

Mid Session Update
(13:00 AEST)

U.S. SENATE MAJORITY LEADER HARRY REID SAYS HE AND REPUBLICAN MCCONNELL HAVE MADE ´´TREMENDOUS PROGRESS´´ TOWARDS DEBT LIMIT, GOVERNMENT FUNDING DEAL, BUT ´´WE ARE NOT THERE YET´´ - RTRS

This headline flashed across news screen just over half an hour before local trade kicked off this morning. The optimistic tone expressed has set the tone for the Asian session so far. Expectations are that a positive conclusion is close at hand.

Every sector saw gains in early trade although the healthcare group was hamstrung by Cochlear (COH). The Bionic ear maker pointed a skew in earnings towards the second half of the year at their AGM. Chairman Rick Halliday-Smith said; " We expect the fiscal 2014 net profit after tax to be at the prior year level with a heavy bias to the second half´´. The comments were tempered by the dividend outlook. ´´If our outlook is unchanged we propose to support the interim dividend at $1.27 a share and also the final dividend at this level.´´ The initial response saw the shares down in the range of 2.5% initially although the shares recovered ground thereafter to be down in the range of 0.75%

At another AGM all the right notes were being sounded. Telstra maintained forecasts of low single-digit income and earnings growth. Free cashflow of between $4.6 billion and $5.1 billion is anticipated for 201314 whilst capital expenditure will be in line with the 14.9 per cent of sales recorded last financial year. Telstra's capex last year was $3.8 billion.

RBA Board Minutes from the October meeting delivered no surprises. The RBA's mild easing bias was again restated in the minutes of the October board meeting. The comment, "that the Bank should again neither close off the possibility of reducing rates further nor signal an imminent intention to reduce them" was identical to the August and September Board minutes. These comments suggest that further changes to the cash rate are data and AUD dependent, and they indicate that the Bank retains an easing bias, albeit a modest one.

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