Australian Stock Market Report

MIDDAY REPORT (12pm AEDT)

The Australian sharemarket is pulling back modestly despite strong gains out of global markets overnight. The All Ordinaries index (XAO) is down 0.2 pct or 8.6 pts to 4305. All sectors are trading in the red with the exception of the mining sector which is helping minimise the losses on the broader market.

The mining sector, which accounts for around 25 pct of the market is around 0.75 pct stronger at lunch. The world's largest miner, BHP Billiton (BHP) is up 1.22 pct or 45 cents to $37.30 while the third largest, RIO Tinto (RIO) is 1.55 pct or $1.02 higher to $66.64.

The financial sector accounts for around 35 pct of the market in terms of market capitalisation (number of shares on issue multiplied by the current share price). Commonwealth Bank of Australia (CBA) is up 0.27 pct or 13 cents to $48.91 but the remaining big three banks are all lower. National Australia Bank (NAB) is down 1.02 pct or 25.5 cents to $24.68.

Overnight, European markets jumped 1.5 pct with Germany's DAX index hitting a two month high. At around 7pm (AEDT) last night, a report showed that the European manufacturing industry is contracting. The news resulted in a selloff in Euro shares in early trade, only to be followed by a late surge due to better than forecast U.S corporate profit results.

This was in stark contrast to China's better than expected reading on manufacturing yesterday which helped lift sharemarkets across the Asia Pacific region.

ResMed (RMD) is one of the worst performers today, with its shares down 10.33 pct or 31 cents to $2.69 after recording an 11 pct fall in its first quarter (July to September) profit. RMD develops and manufactures medical equipment for treating respiratory disorders and posted a US$50.5 million profit over the quarter. The company partly blamed a strong Australian dollar for its result.

It is a big day for Annual General Meetings (AGMs) today, with over 30 Australian companies meeting with shareholders throughout the day. Big names such as Billabong (BBG), Foster's Group (FGL), Treasury Wine Estates (TWE), Stockland (SGP) and Southern Cross Media (SXL) are all scheduled to meet.
Billabong (BBG) shares are up 5 pct or 18 cents to $3.78 after strong growth in its sales over the past 3 months.

Today is the first day of trade this week for New Zealand markets due to the Labour Day public holiday yesterday. Its Consumer Price Index (CPI) rose by a less than expected 0.4 pct last quarter (July to September) today.

This measures the change in prices for goods and services bought by consumers in New Zealand. This is important because it can impact the central bank's stance on interest rates. When inflation remains higher than desired it is more likely for rates to either increase or be kept on hold.

Yesterday, the Australian Institute of Petroleum (AIP) released its weekly report on petrol prices across the country. The average price of unleaded petrol fell by 0.8 cent to 145 cents a litre last week.

The Singapore price of unleaded petrol tends to give us an indication of what prices could look like over the coming weeks in Australia. This is because Singapore is the refining and distribution centre for oil in the Asia Pacific region. Most of the petrol we receive from offshore comes from Singapore and there tends to be a one to two week delay between changes in prices there and changes at the wholesale level locally.

Overnight the world's largest manufacturer of mining and construction equipment, Caterpillar (CAT;us) beat profit expectations significantly overnight with it recording a 44 pct rise in earnings between July and September (September quarter) to US$1.14 billion. CAT shares rose around 5 pct in U.S trade.

CAT has been around since the 1920s and has benefited from a mining boom and growth in emerging markets.

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 be 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 with Japan's Nikkei 225 index down 0.06 pct or 5.69 pts to 8838.29, while South Korea's KOSPI index is off 0.11 pct or 2.12 pts to 1896.2.

So far in trade at lunch 812 million shares have been traded worth $1.76 billion. 354 shares are up, 378 are lower and 344 are currently unchanged.

The Australian dollar (AUD) is trading at around a 1.5 month high against the greenback and buys US104.6 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.

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