Australian Stock Market Report – Midday 11/2/2012

MIDDAY REPORT
(11.30am AEDT)

The Australian sharemarket is improving modestly at lunch for the fourth time this week, with the All Ordinaries Index (XAO) up 0.2 per cent or 10.9 pts to 4490.8. Yesterday was the worst day for the local market in three months however, with equities slipping by 1.2 per cent due in part to unimpressive economic news in China.

Overnight, global markets gained strongly thanks to some better than expected job number in the U.S. There were 158,000 private sector jobs added in October according to ADP; the biggest processor of salary payments to the private sector in America. The Dow Jones Industrials Index rose by 1 per cent, making it its best daily improvement since mid-September.

Most sectors are trading in positive territory; however modest weakness from the defensive healthcare and telecommunication sectors in addition to a flat performance from the major banks is holding the market back. The XAO was up by over 0.6 per cent earlier in the session.

Commodity prices jumped overnight; helping our miners record their best daily improvements in over two weeks. The world's biggest mining outfit, BHP Billiton (BHP) is up 1.71 per cent or 58 cents to $34.40 while the smaller Rio Tinto (RIO) is 2.16 per cent or $1.21 higher to $57.46.

The major banks were all higher in the first hour of trade; however are now mostly weaker. Commonwealth Bank (CBA) is down 0.3 per cent or 18 cents to $57.09, ANZ Banking Group (ANZ) is easing by 0.2 per cent or 5 cents to $25.28 and Westpac (WBC) is off by 0.12 per cent or 3 cents to $25.11. National Australia Bank (NAB) has struggled most substantially of the major this week following its disappointing profit numbers on Wednesday. NAB shares are down 3.4 per cent this week.

A number of Annual General Meetings (AGMs) were held this week; with big names such as JB Hi-Fi (JBH), CBA, Crown (CWN) and Noni B (NBL) all reporting. Today Australia's largest airline, Qantas (QAN) is holding its AGM. The company admitted that it has been a turbulent ride over the past few years. QAN shares are unchanged today but have fallen for three straight years, slipping by 55 per cent over the past two years.

On the economic front today, comprehensive data on Australia's economic performance in 2011/2011 will be issued titled "Australian Systems of National Accounts". Producer prices (business inflation) numbers were out at 11.30am (AEDT) and have shown that inflation is not a concern; rising by just 0.6 per cent over the previous quarter. A rate cut next Tuesday is still on the cards for the Reserve Bank.

U.S futures are currently pointing to a slightly lower start to trade tonight. The U.S market trades between 12.30pm (AEDT) and 7am (AEDT).

So far in trade at lunch, 717 million shares have been traded worth $1.7 billion. 397 shares are up, 331 are lower and 287 are currently unchanged.

The Australian dollar (AUD) is stronger and buys US103.9 cents, €80.4 cents and £64.5 pence.

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.

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