Australian Stock Market Report - Midday 11/10/2011

MIDDAY REPORT (12pm AEDT)

Investor focus appears to have turned from Greece to Italy, with fear gripping offshore markets overnight. US and European share markets were heavily sold off after Italian borrowing costs (10 year bond yields) rose to 7.5pct, the highest level since the Euro was launched in 1999. Any figure above 7pct is psychological because that was the level which heightened worries about Greece, Ireland and Portugal and all three countries eventually needed a bailout. The Dow Jones Index closed down 3.2pct overnight while European markets slumped more than 2pct.

Locally, investors have decided to take their lead from the US and Europe, rather than fundamentals. That's sent the local market down 3pct in early trade.

Financial stocks are bearing the brunt of the selling. Not helping sentiment is the fact the National Australia Bank (NAB) and the ANZ (ANZ) are both trading without rights to their dividends. Shares in the NAB have fallen 5.1pct to $24.45 while the ANZ is down 5.8pct to $20.49.

Port and rail operator Asciano Limited (AIO) has fallen 3.9pct to $1.43 after failing to update the market with specific FY guidance.

In economic news; 10,100 jobs were created in the Australian economy in October, leaving unemployment at 5.2pct. The Australian dollar remains virtually unchanged from overnight movements and at 12pm AEDT is worth US101.32c.

Juliette Saly, CommSec Market Analyst

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