Australian Stock Market Report - Midday 11/01/2011

LUNCHTIME REPORT (11am AEDT)

The local share market is in the red in early trade, following a weak session on Wall Street and ahead of this afternoon's Reserve Bank interest rate decision. Overnight, Wall Street sold off by more than 2pct as profit takers moved in at the end of the month. However over the course of October, stocks rose by 9.6pct, marking one of the best monthly performances on the Dow Jones Index in years. In early trade, the All Ordinaries Index (XAO) is down 43.4pts or 1pct to 4317.1.

Financial stocks are under pressure, with the financial sector down 1pct. Banking stocks in the US were heavily sold off overnight, with the Bank of America down 7pct and JP Morgan Chase off 5pct. The ANZ(ANZ) which reports this week, has fallen 1.3pct to $21.40.

Airline stocks remain well supported. Qantas (QAN) continues to add to yesterday's rally, as the airline resumes flights around the world following its weekend grounding. QAN is up 3.9pct to $1.675 in early trade, while Virgin Australia (VBA) is steady at 37.5c.

The Chinese PMI manufacturing index is due for release today and could provide a positive catalyst for the local share market.

Investors are also awaiting the G20 meeting later in the week.

The RBA hands down its November rate decision at 2.30pm AEDT. Rates have held steady at 4.75pct since November last year.

The Australian dollar is buying US105.43c, £0.6556 and €76.06c.

A total of 3.9 billion shares have changed hands in the first hour of trade, worth $776 million. 179 are up, 445 are down and 265 are unchanged.

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