Australian Stock Market Report – Midday 10/24/2012

MIDDAY REPORT
(1.30pm AEDT)

The Australian share market managed only a small win yesterday but all or the gains have been wiped out today. Overnight we saw wide spread selling on European and US Stock and commodity markets.

The All Ordinaries Index (XAO) started the session weaker off 33 points to 4,568 points with mining and energy stocks leading the falls. By lunch time the losses had been reduced with The All Ords down 31.8 points.

The Banking & property sectors had started to make comeback with 3 of the big 4 banks slightly weaker and Commonwealth Bank of Australia (CBA) slightly higher up $0.07 to $57.17.

But mining and energy stocks were still in the red. The S&P/ASX 200 Materials sector gained back 1.3% in morning trade. BHP Billiton Limited (BHP) lifted by 1.29% to $34.34. Rio Tinto Limited (RIO) off 1.25% to $57. Fortescue Metals (FMG) gave back 1% to $4.16. OZ Minerals (OZL) slightly higher still gained after yesterday's strong Q3 production- result.

The Gold price fell overnight by nearly US$20 an ounce. Our largest listed gold producers Newcrest Mining Limited (NCM) lost 1.8% to $26.60 and St Barbara Limited (SBM) today reported its quarterly gold production numbers and its numbers were slightly lower than forecasted by a few thousand ounces. St Barbara's cash operating costs did increase in the quarter to $853 per ounce higher than expected off 4.89%.

The US$ oil price also lost ground again overnight, falling to US$86.20 a barrel. The S&P/ASX 200 Energy sector fell in early trade, off 1.68%, Woodside Petroleum Limited (WPL) still lower off 1.61% to $34.95 and Santos Limited (STO) slightly higher off 0.5% to $11.76.

Whitehaven Coal (WHC) has placed its shares in a trading halt rumours in the market are around talk that WHC's major shareholder Nathan Tinkler is threatening to roll the company´s board.

WorleyParsons Limited (WOR) today said it had purchased TWP Holdings a South African metals and mining service firm for US$103 Million. TWP has a very strong and growing business in the precious metals area and this will help Worley's build its position in this space. WOR also warned of depressed trading conditions in the sector WOR off 6.87%

Telstra Corporation Limited (TLS) has fallen 0.25% to $4.04, after announcing it had purchased Australian internet service provider Adam Internet. TLS said the deal is still subject to regulatory approval.

Billabong (BBG) in focus again today after CEO Lorna Inman has backed her brand, yesterday by confirming that she had snapped up 59,000 shares in the company last week. BBG today fell 1.17% even with today's news that it had seen improvements in conditions and was on track to meet its current forecasts.

Fairfax Media Limited (FXJ) higher after its AGM comments today. CEO Greg Haywood was blunt with investors today and they seemed to like it. He said conditions were tough but the firm would do whatever was needed to turn the business around. ´´Let´s not kid ourselves,´´ he said ´´There are challenges ahead". Also confirming FXJ was on track to achieve $235 Million in cost savings by June 2013. FXJ up 1.5%.

In economic news, The Consumer Price Index - the main measure of inflation in Australia - rose by 1.4% in the September quarter, higher than market expectations. In seasonally adjusted terms the CPI rose by 1.2%. The CPI stands 2.0% higher than a year ago.
The Reserve Bank monitors three measures to derive the underlying inflation rate. The trimmed mean rose by 0.7% in the September quarter; the weighted median rose by 0.8 per cent and the CPI less volatile items rose by 0.7%.

Reserve Bank has scope to cut rates: Despite the latest inflation reading being higher than consensus, inflation remains well within the Reserve Bank's target band and as such the Reserve Bank can afford to cut rates and support confidence. CommSec expects rates to be cut by a quarter of a per cent in November.

The most significant price rises this quarter were for electricity (+15.3%), international holiday travel and accommodation (+6.6%) and medical and hospital services (+4.5%). The most significant price falls this quarter were for automotive fuel (-3.9%) and motor vehicles (-1%).

The Australian dollar climbed higher after the CPI numbers at US103.16c and €79.42c.

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