Australian Stock Market Report – Midday 1/13/14

MID-SESSION REPORT
(12.20pm AEDT)

The Australian sharemarket is in the red for the sixth time in seven trading days following disappointing U.S. jobs growth. The All Ordinaries Index (XAO) is 0.1 per cent lower, with the mining sector the lone improver at lunch.

On Friday night, a report (non-farm payrolls) out of the U.S. showed that there were only 74,000 jobs created in December (120,000 fewer than expected) and the smallest rise in three years. The November reading was revised higher by around 30,000 and the unemployment rate fell from 7.0 per cent to 6.7 per cent. The improvement in the jobless rate had less to do with jobs growth and more to do with a shrinking workforce and fewer people looking for jobs.

Australia's sixth biggest company, Telstra (TLS) is down modestly and has had an uneventful start to 2014. The telco confirmed the sale of a 70 per cent stake in its directories business - Sensis to U.S. private equity firm Platinum Equity for $454 million. The sale excludes its voice services business and TLS will retain a 30 per cent stake in Sensis valued at $649 million. TLS expects to book a $150 million accounting loss from the sale.

The disappointing U.S. jobs report on Friday pushed the U.S dollar lower and commodity prices higher. This is helping the miners lift after a slow start to January. Australia's biggest miner, BHP Billiton (BHP) is up 0.53 per cent while the smaller Rio Tinto (RIO) is up by 0.6 per cent. Underperforming gold miner, Newcrest Mining (NCM) is 5.5 per cent firmer, taking its gains for the year so far to 13.08 per cent (slumped by 64.8 per cent in 2013).

The financials (including the big banks) outperformed the broader market in 2013 by around 10 per cent; however have been slow starters this year. Commonwealth Bank (CBA) and National Australia Bank (NAB) are both 0.5 per cent higher, while both Westpac (WBC) and ANZ Banking Group (ANC) are easing by 0.3 per cent.

On the economic front, housing finance rose by 1.1 per cent in November while the number of jobs advertised by Aussie businesses slipped by 0.7 per cent.

At lunch, 667 million shares have changed hands worth $1.07 billion. 378 stocks are higher, 364 are in the red and 280 are unchanged.

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