Australian Stock Market Report – Midday 10/8/13

MID-SESSION REPORT
(12pm AEST)

Australian stocks remain in the red for a third consecutive trading session, after Wall Street closed lower overnight on budget concerns. The US government shutdown has now entered its seventh trading day, or second week, and is starting to rattle investor sentiment. The Bank of America added to investor worries over the weekend by downgrading its fourth quarter US GDP (economic growth) forecast from 2.5 per cent to 2 per cent.

In early trade, sellers have the upper hand on the Australian share market, which has fallen by 0.4 per cent in early trade.

Energy and mining stocks are the worst performers while the banks have also come under some pressure.

Shares in Linc Energy (LNC) have fallen 11.5 per cent to $1.04 after the energy company announced plans last week to delist from the ASX and list on the Singapore exchange. It means that any investor in Australia wanting to hold their shares would have to get an international account, hence the selling.

Elsewhere, the board of Victorian-based Warrnambool Cheese and Butter Factory (WCB) has recommended its shareholders accept a $390 million takeover proposal from Canadian dairy company Saputo. It's an all cash deal offering WCB shares at $7 each. The deal represents an 11 per cent premium of Bega Cheese's (BGA) offer of $6.30 per share. The deal is subject to approval from the Foreign Investment Review Board. WCB shares are up 12.2 per cent at lunchtime to $7.25 while BGA is lower by 3.4 per cent to $3.46.

In economic news, business confidence rose to a three and a half year high in September to a reading of plus 12. Conditions remain subdued at a reading of minus 4, although up from August's reading of minus 7.

The Australian dollar is firmer at US94.44c. It is also buying £0.5867 and €69.56c.

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