Australian Stock Market Report – Midday 10/2/2012

MIDDAY REPORT
(12.45pm AEST)

Today, the Australian share market followed the lead of the US and European markets higher, with the gains in oil and gold helping the material sector run higher in early trade. By lunchtime the All Ordinaries Index (XAO) had held on to early gains up 28 points to 4,436 points.

Overnight the better than expected manufacturing data out from Europe and the US boosted sentiment and helped investors push aside concerns over Eurozone unemployment which hit a new record high of 11.4%.
The focus of the 2nd half of today's trading session will be the outcomes from the Reserve Bank of Australia (RBA) October board meeting and interest rate decision. The money market is still factoring in a 66% chance of a 25 basis point or ¼ or 1% cut today. Most market analysts are expecting the overnight cash rate to stay at 3.5% in October and the RBA to cut in November at its Cup day meeting.
Today the S&P/ASX 200 Materials sector added 0.85% by lunch after gains in industrial metal miners including the steel sector and gold stocks. Overnight base metals on the London Metals Exchange (LME) gained across the board helping BHP Billiton Limited (BHP) build on its solid run again this morning up another 0.88% to $33.41. Rio Tinto (RIO) was one of the weaker performers in the mining sector only up by 0.42% in early trade to $53.58. Australia's third biggest iron ore miner, Fortescue Metals (FMG) was place in a trading halt before the start of trade today. Fortescue (FMG) chairman Andrew Forrest today won his High Court challenge against ASIC over claims he mislead shareholders over mine developments. FMG's share price last traded at $3.50.

The Gold price moved higher overnight, just off 7 month highs, to US$1,774 an ounce. Our largest listed gold producers Newcrest Mining Limited (NCM) by lunch was up 0.76% to $29.26. Silver Lake Resources Limited lifted over 2.3% to $2.33 and Kingsgate Consolidated Limited (KCN) regained 0.67% to $6.01.

Arrium Limited (ARI) - the old Onesteel- Arrium's share price rallied over 26% in early trade yesterday and today the share price added another 5% in early trade, to $5.88, still buoyed by yesterdays $1Billion unsolicited takeover proposal from a mostly Korean consortium made up of Noble and Posco Australia and others. Arrium rejected the offer saying the premium for the share price was too low. Rivals in the steel space, BlueScope Steel Limited (BSL) adding another up 1.16% while Sims Metal Management Limited (SGM) up 0.74% to $9.52.

Lynas Corp (LYC), the rare metal miner and refiner added 1.23% to $0.82 while PanAust Limited (PNA) regained over 2%.

The industrial sector regained some strength this morning up 0.48%. Qantas Airways Limited (QAN) added 2.5% after announcing it had raised cash to pay down more debt by selling off part of its freight business while Sydney Airport lifted by 0.94% to $3.21. 2%. The slide still continued in the mining service firms and mining material provider stocks, Bradken Limited(BKN) off 1.46% and WorleyParsons Limited (WOR) off another 0.25% to $27.63.

The medical sector was also hit with CSL Limited (CSL) off 0.3% to $45.64 and with Ramsay Health Care Limited (RHC) regained yesterday's losses up 0.54% to $24.10.

Energy stocks moved higher with the US$ oil price back above US$92 a barrel. Woodside Petroleum Limited (WPL) added 0.8% but Santos Limited (STO) was lower off 2.70% to $11.56. Santos today announced that it had made a new purchase has buying part of a slice of Central Petroleum Ltd.´s (CNP) exploration acreage in the Central Australia.

Retailers are currently held back ahead of the RBA result Wesfarmers Limited (WES) up by 0.22% to $33.99 Woolworths Limited (WOW) adding a few cents to $28.88. Myer Holdings Limited (MYR) flat.
Telstra Corporation Limited (TLS) up 1.02% to $3.91.

The Australian dollar (AUD) continues hold at US103.55 cents and 0.8050 euro cents.

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