Australian Stock Market Report

MIDDAY REPORT (12.30pm AEDT)

After four straight days of gains this week, the Australian sharemarket is finally recording healthy gains with the All Ordinaries index (XAO) up 2.1 pct or 90.7 pts to 4328.2. All sectors are currently higher with the miners the top performers in percentage terms.

The S&P/ASX 200 Materials index is up 3.51 pct or 394.2 pts to 11695.1. The world's largest miner and the index leader (the biggest company listed on the Aussie market) BHP Billiton (BHP) is 3.69 pct or $1.34 higher to $37.88 while RIO Tinto (RIO) is up 4.47 pct or $2.97 to $69.42.

Australia's largest banks are also posting healthy gains with the S&P/ASX 200 Financials index up 2.16 pct or 86.3 pts to 4073.2. All sectors are currently higher with Westpac (WBC) up 2.79 pct or 60 cents to $22.10, ANZ Banking Group (ANZ) is 2.34 pct or 48 cents higher to $20.97, National Australia Bank (NAB) is up 2.11 pct or 52 cents to $25.19 and the Commonwealth Bank of Australia (CBA) is 1.79 pct or 86 cents stronger to $48.87.

You can thank George Papandreou, the Greek Prime Minister for part of the day's gains. Last night he announced that Greece will (probably) no longer be holding a referendum to vote on the European bailout package for the struggling Eurozone nation.

It certainly has been an extremely strange few weeks for the Europeans. Last week markets were surging following news of the three pronged solution for the debt crisis.

Firstly, private banks agreed to accept a 50 pct write-off on their holdings of Greek bonds (debt). The idea behind this was to significantly reduce Greece's debt problems. The European Council President Herman Van Rompuy announced that both the International Monetary Fund (IMF) and the Eurozone nations would give Greece another 100 billion Euros.

The size of the continent's bailout/rescue fund was also increased to 1 trillion Euros which is more than twice as large as its current size. The major banks in Europe are also required to raise additional funds to shield them of potential problems arising from other European nations in the future.

On Tuesday this week, Mr Papandreou announced that a referendum would need to be carried out prior to the nation accepting the Eurozone's bailout package. This has now been called off.

Mario Draghi, who has already been nicknamed as 'Super Mario' led his first meeting as head of the European Central Bank (ECB) last night and cut rates for the first time since April 2009 to 1.25 pct. This helped European markets surge higher.

Throughout the day there are close to 20 Australian companies holding their Annual General Meetings and the Reserve Bank of Australia (RBA) has also released its quarterly statement on monetary policy in which it has downgraded the country's inflation and growth forecasts.

Qantas (QAN) shares are holding up very well despite its Chief Executive Alan Joyce spending his morning in a parliamentary inquiry. QAN shares are up 2.22 pct or 3.5 cents to $1.61.

So far in trade at lunch, 769 million shares have been traded worth $2.04 billion. 628 shares are up, 237 are lower and 314 are currently unchanged.

The Australian dollar (AUD) has surged over the past 24 hours rising from US102.1 at around midday yesterday to US104 today.

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.

Steven Daghlian, CommSec Market Analyst

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