Australian Stock Market Report

MIDDAY REPORT
(1pm AEST)

On Friday the US market closed mixed as the early excitement over the better than expected US jobs report started to dwindle away. The NASDAQ closed in the red as Apple and Zynga shares pulled the index lower. Metal prices lost ground and concern over European growth added to the pain.

The Australian share market had a very quiet start to the week opening only 1 point higher. By lunchtime the All Ordinaries Index (XAO) had fallen back slightly and was off 12 points to 4,501 points. The reversal in the US$ oil price on Friday caused renewed weakness in energy stocks but did help the transport sector in early trade.

On the economic front, the market was not surprised to see that employers in Australia have once again held back from looking for new workers. The ANZ job advertisement series for September showed another slide in the last month down 2.8% for the last 6 months.

Industrial stocks were in focus with the news that new that the Queensland State Government sold down its stake in QR National Limited (QRN). Today QRN told the market it has bought back $1Billion worth of QR National shares at the same closing price at the end of Friday's session, at $3.47, totalling an 11.9% stake. The Government also sold off another $500 Million worth of shares to private investors, and the QLD Government is expected to reap a $400 million profit of the back of this sale. Today QR National shares gained over 5% to $3.65 a share as investors were happy to see the surprised by the sale at full value when the market had expected QRN to have to take a discount price for the shares. Toll Holdings Limited (TOL) up 0.9% to $4.48 and Sydney Airport (SYD) added 0.6% to $3.27. Asciano Limited (AIO) added 0.11% to $4.46.

We are keeping our eyes on the service sector firm Macmahon Holdings (MAH) after the firm was placed into a trading halt on Friday after circulation of a fake bid hit the market. MAH management confirmed to the ASX that it had not received any bid from a Chinese operator (as stated in the fake email that was circulating) and would place its share in a trading halt until it felt that this drama had been resolved. MAH shares did come back on line on Friday once all details were made public and its share have fallen again in morning trade to $0.28.5 cents. NRW Holdings Limited (NWH) also lower off 1.7% while mining drill and exploration firm Clough Limited (CLO) added 2.7%.

Today the retail sector started off stronger but after the weaker than expected read on the job ad front the sector reduced its early gains. The S&P/ASX 200 Consumer staples sector lifted by 0.03% by lunch time. The big name food and beverage retailers; Woolworths Limited (WOW) added 0.17% and its rival Wesfarmers Limited (WES) gave back 0.17% to $34.48 and Coca-Cola Amatil Limited (CCL) lost 1.07%.
Today the S&P/ASX 200 Consumer Discretionary sector all started off strong, and by lunch had still managed to hold on to a 0.26% gain. Surfwear retailer, Billabong (BBG) shares fell another 3.3% to $1.02.5. JB Hi-Fi Limited (JBH) gave back 0.8% to $9.90 and Super Retail Group Limited (SUL) up 0.36% while Breville Group Limited (BRG) fell 0.17%.

The financials also lost ground as the day went on hit by the weaker than expected job ad report. Friday's profit downgrade by Bank of Queensland Limited (BOQ) caused its share price to fall another 4.3% to $7.22 in early trade. Bendigo and Adelaide Bank Limited (BEN) lifted by 0.3%. Commonwealth Bank of Australia (CBA) lost a few cents while Westpac Banking Corporation (WBC) up 0.3% to $25.95. Insurance Australia Group Limited (IAG) came off 1% to $4.41 and QBE Insurance Group Limited (QBE) gave back 0.18%.

The S&P/ASX 200 Materials sector fell into the red at the start off trade and by lunch was off 0.7%, as BHP Billiton Limited (BHP) lost just over 0.5% and Rio Tinto (RIO) off $0.10 or 0.18% to $54.80 while Australia's third biggest iron ore miner, Fortescue Metals (FMG) turned higher up 0.4% to $3.62. Today Aquila Resources Limited (AQA) advised the market of its cost blowout at its Pilbara iron ore mine project. The company said its cost had increased by nearly 30% but the market was already factoring in an expected increase in-line with other operations in the area. Aquila shares fell by 0.75% to $2.66.
Sims Metal Management Limited (SGM) gave back some of Friday's gains off 1.6% to $10.13.

The Gold price hit an 11 month high on Friday before the release of the US Non-Farm payroll numbers came in better than expected and the price slipped by over US$14 to US$1,783 an ounce. The US$ gold price has continued to lose ground in Asian trade now at US$1,773 off US$8 an ounce. Our largest listed gold producers Newcrest Mining Limited (NCM) added over 2.9% to $28.27 and Kingsgate Consolidated Limited (KCN) off 2.1% to $5.92. Regis Resources Limited (RRL) gave back 2.5% to $5.60.

The US$ oil price has continued its wild ride off another 2% on Friday to US$91.92 a barrel and in early Asian trade the US$ price continued to lose ground now at US$89.63 a barrel. S&P/ASX 200 Energy sector gave back 0.77%. Woodside Petroleum Limited (WPL) fell back 0.97% to $32.82 and Santos Limited (STO) lost over 0.8% to $11.51.

Telstra Corporation Limited (TLS) added 0.13% to $3.96. Qantas Airways (QAN) up 0.8% to $1.26.

The Australian dollar (AUD) held steady at US101.69 and 0.78.17 euro cents.

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