Australian Stock Market Report

MIDDAY REPORT (12pm AEDT)

The Australian sharemarket is managing to hold on to some of its gains at lunch, with the All Ordinaries index (XAO) up 0.2 pct or 6.9 pts to 4132.7. Shares opened higher and continued to gain for the first hour of trade however started to pullback at around 11am (AEDT) following the Federal Government's mid-year budget review.

Three of the four major banks are losing ground, with Commonwealth Bank of Australia (CBA) down 0.94 pct or 46 cents to $46.47, National Australia Bank (NAB) is 0.62 pct or 14 cents lower to $22.61, Westpac (WBC) is down 0.49 pct or 10 cents to $20.15. ANZ Banking Group (ANZ) is the only major bank to gain and is up by around 0.26 pct or 5 cents to $19.24 after underperforming the other majors yesterday.

The miners are largely flat at lunch however with RIO Tinto (RIO) up 0.11 pct or 7 cents to $63.34 while the larger BHP Billiton (BHP) is down by around 0.5 pct. If the weakness in the sector accelerates, you could see the market dipping into the red over the next few hours. The mining sector accounts for around 25 pct of the Australian sharemarket (in terms of its size).

Politics were at play as expected in today's mid-year budget review. Treasurer Wayne Swan said that the government remains committed to return to surplus next year with a modest $1.5 billion surplus in 2012-2013 forecast. You would expect the government to do all it can to stick to this promise for political reasons even if the surplus is very modest.

Around 150 companies are scheduled to hold their Annual General Meetings (AGMs) with shareholders today including retailer Harvey Norman (HVN) which is currently up by 0.49 pct or 1 cent to $2.04.

Following the start of daylight savings at the start of October, major Asian markets will be trading between the hours mentioned below until April next year (note that over the next month, some of the times might be slightly off due to several countries in the region changing their clocks at differing periods).

The Hong Kong sharemarket trades in two sessions each day and will now open for trade between 1pm (AEDT) and 3.30pm (AEDT) while the second session is between 5.30pm (AEDT) and 7pm (AEDT).

Out of Japan, the first session will be between 11am (AEDT) and 1pm (AEDT) while the second session is between 2.30pm (AEDT) and 5pm (AEDT).

The Singapore exchange will be open for trade between 12pm (AEDT) and 3.30pm (AEDT) for the first session and then between 5pm (AEDT) and 8pm (AEDT) for the second.

Asian markets are mostly higher with South Korea's KOSPI index up 1.74 pct or 31.53 pts to 1846.81, shares in Japan 0.8 pct higher while stocks in China are also up by a modest 0.25 pct.

So far in trade at lunch, 879 million shares have been traded worth $1.6 billion. 438 shares are up, 336 are lower and 334 are currently unchanged.

The Australian dollar (AUD) has lost some ground against the greenback over the past few hours and buys US98.8 cents.

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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