Australian Stock Market Report – Midday 10/23/13

MID-SESSION REPORT
(12.20pm AEDT)

The All Ordinaries Index (XAO) is rising for the seventh straight day; up 0.2 per cent and sitting at around a five year high. This makes it the longest winning streak in nine months and comes courtesy of some worse than expected US jobs numbers overnight.

On the economic front, the September quarter Consumer Price Index (CPI) was out at 11.30am (AEDT). Inflation between July and September rose by 1.2 per cent (market was expecting a more modest 0.8 per cent). This has effectively made another rate cut even less likely. The market is now factoring in just a 5 per cent chance of a cut next month (was 10 per cent this morning).

Despite the inflation reading taking some of the shine off the gains, the mining sector is today's standout performer. BHP Billiton (BHP) is up1.6 per cent, adding to Tuesday's 2.3 per cent gain following its quarterly production report. Gold miner Newcrest Mining (NCM) is up 5 per cent and three of the big four banks are a touch stronger. Telco, Telstra (TLS) is up 0.5 per cent at lunch. TLS is holding its investor day and announced a refined long-term strategy, with 'improving customer advocacy' as its primary focus.

There were 148,000 jobs created in the US over September, around 30,000 less than what the market was expecting. The August reading was revised higher by 24,000 however, while the unemployment rate eased to 7.2 per cent. This is an additional push for the Federal Reserve to not make any changes to its current stimulus strategy. Janet Yellen is expected to replace Ben Bernanke as the head of the US central bank in mid-January (she is considered to be on the same page as Bernanke strategy wise), while the budget and debt ceiling issues will need to be dealt with in the early part of 2014 - yet another reason that the Fed is likely to not touch stimulus for now.

This has given the Australian dollar a boost, while sharemarkets have also benefited. The miners are the standouts, with BHP Billiton (BHP), Rio Tinto (RIO) and Fortescue Metals (FMG) all issuing solid production reports over the past fortnight.

The Australian dollar buys US97.4 cents; a full US3 cents higher than just three weeks ago.

At lunch, 1.08bn shares have changed hands, worth $1.8bn. 519 stocks are higher and 316 are in the red.
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