Australian Stock Market Report – Midday 11/5/2012

MIDDAY REPORT
(12.30pm AEDT)

The Australian sharemarket is off to a negative start, with the All Ordinaries Index (XAO) down 0.2 per cent or 10.6 pts to 4472.7. Almost all sectors are in the red; however the defensive telcos are up modestly. Telstra (TLS), the sixth biggest company on the local market is up 0.12 per cent or 0.5 cent to $4.09.

Australia's second biggest bank by market capitalisation, Westpac (WBC) is up 0.48 per cent or 12 cents to $25.15 after delivering a slightly better than expected full-year cash profit of $6.6 billion. WBC will be paying an 84 cent a share dividend to eligible shareholders. WBC shares are up around 25 per cent this year, ANZ Banking Group (ANZ) is 22.5 per cent higher, Commonwealth Bank of Australia (CBA) is 16.5 per cent firmer while National Australia Bank (NAB) is dragging its heels this year and is only 6.5 per cent stronger.

The S&P/ASX 200 Materials index (a measure of the performance of the mining industry on the sharemarket) is 0.21 per cent lower; however some of the biggest players in the sector are trading higher. BHP Billiton (BHP) is up 0.15 per cent or 5 cents stronger to $34.48, Rio Tinto (RIO) is up 0.07 per cent or 4 cents to $57.42. Iron ore player, Fortescue Metals (FMG) is edging higher by 0.25 per cent or 1 cent to $4.02.

On the economic front retail spending rose by 0.5 per cent last month while a trade deficit of $1.46 billion was recorded over the same period. Both results were a bit better than market forecasts. Unfortunately, the news isn't great for job seekers with the number of jobs advertised by Australian businesses down by 4.6 per cent in October; the seventh consecutive month of falls.

This week is certainly going to be a busy one for economic news with the Reserve Bank of Australia (RBA) making its monthly decision on interest rates tomorrow afternoon at 2.30pm (AEDT). The market is factoring in a 55 per cent chance of a rate cut, making it the second cut in a row. The RBA rarely only makes one rate cut without backing it up with another the very next month. The monthly jobs report will be out on Thursday and is expected to record only modest job growth of 10,000 for the month.

U.S futures are currently pointing to a slightly better start to trade tonight. The U.S market trades between 1.30am (AEDT) and 8am (AEDT).

So far in trade at lunch, 677 million shares have been traded worth $1.35 billion. 320 shares are up, 485 are lower and 301 are currently unchanged.

The Australian dollar (AUD) is weaker and buys US103.5 cents, €80.7 cents and £64.6 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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