Australian Stock Market Report – Midday 11/25/13

MID-SESSION REPORT
(12.20pm AEDT)

The Australian sharemarket is improving following a tough week for local shares. The All Ordinaries Index (XAO) is up 0.5 per cent, with gains in every sector. Thanksgiving in the US this week will result in the closure of the US market on Thursday and its partial closure on Friday. This could keep volumes a little light over the next five sessions. The S&P500 index closed above 1,800 points for the first time on Friday while the DOW index ended over 16,000 points for the second consecutive day (first time this has happened).

Warrnambool Cheese (WCB) is up 2.2 per cent after receiving a sweetened $9.20 per shares ($514.9 million) takeover offer from Canadian food giant, Saputo. The offer is conditional on Saputo acquiring at least 50 per cent of WCB and the offer has been backed by WCB's board. WCB is up 156 per cent since January and was in a trading halt up until 11.20am (AEDT) this morning. There are currently three parties in a bidding war to purchase the dairy purchaser.

The price of oil has dropped a touch to US93.9/b following a nuclear agreement between Iran and the West at the weekend. Iran has historically been the third biggest oil exporter and fourth biggest global producer of the commodity. Its oil exports have slumped by 60 per cent over the past two years due to sanctions. Iran's crude oil sales cannot increase over the next six months (term of the agreement); however it could renegotiate this for the future.

Oil refiner, Caltex (CTX) is one of the worst performers after issuing its October update on margins. CTX is down 1.9 per cent as its margins continue to be squeezed.

No major economic news is expected to be issued in Australia or the region today.

The Australian dollar is a full US2 cents lower against the greenback than a week ago and buys US91.7 cents.

The miners are up by just 0.2 per cent, with iron ore miner Fortescue Metals (FMG) up 0.5 per cent while both BHP Billiton (BHP) and Rio Tinto (RIO) are modestly firmer. Gold miner Newcrest Mining (NCM) is one of the big losers as gold prices are struggling to gain traction as the US dollar firms. NCM is down 1.65 per cent today and is 62 per cent weaker this calendar year.

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