Australian Stock Market Report – Midday 1/16/2013

MID-SESSION REPORT
(1pm AEDT)

The Australian share market lifted slightly in morning trade, with gains in banking and health care stocks covering the losses for our big name miners and energy players.

The All Ordinaries Index (XAO) lifted 17.6 points to 4,760 points. Overnight global markets ended mixed, the Dow listed its 5th straight day of gains while the NASDAQ came under pressure from concerns over retail sales of technology goods in 2013. Apple shares fell 3% on concerns that weak sales of the iPhone 5 could lead to a pullback in production and future orders. Facebook also lost ground overnight after revealing its new graphics search program for users that will be run by Microsoft and Bing. Facebook shares fell over 2.7% at the close as many investors and market watchers had hoped the firm would be revealing a new smart phone or operating system and this did not occur.

By lunch the All Ordinaries Index (XAO) had gained 18.5 points to 4,761 points. S&P/ASX 200 Materials sector was the only index sector in the red off 0.05% while many of the other sectors had only listed minimal gains. The volumes on the market today have been rather low as investors await the result of key banking stocks in the States tonight and tomorrow's Australian job numbers.

Building product firm Boral (BLD) told the market today that is was looking at restructuring its business and this has led to a big lift in the share price up to the highest level since May 2011, up 9.6% to $4.78. The full company restructure will lead to 700 - 1,000 job cuts across all units and staff levels. Boral is looking to save $90 Million a year the media is speculating today that the brunt of the job losses will come from Boral´s head office is in Sydney. Adelaide Brighton Limited (ABC) up 0.3% while James Hardie Industries PLC (JHX) added 1.18%. fertiliser firm , Incitec Pivot Limited (IPL) gave back 2.6%.

Yesterday, surfwear retailer, Billabong (BBG) received a new $526 million, $1.10 a share, non-binding take-over offer from a US consortium. The group consists of VF Corp, which is an American sportswear firm that owns the REEF, and Wranglers brands and the private equity firm Altamont Capital Partners. BBG's share price rallied higher yesterday on this news but today fell back in morning trade, and is now unchanged from yesterday's close at $0.98. In the retail space, David Jones Limited (DJS) lifted by 1.5% to $2.33 and Myer Holdings Limited (MYR) added 1.75% while Kathmandu Holdings Limited (KMD) gave back another 2.3% to $1.69.

Mining stocks were mixed the big name miners weaker while the medium to small sized precious metal miners did well. BHP Billiton eased another 0.75% to $36.25 and Rio Tinto fell 0.5% to $65.57 after gaining 0.5% in London trade overnight. Rio reported December quarter and 2012 full year production numbers late yesterday. The firm beat market expectations and its own pre-recorded guidance on iron ore production. Elsewhere, Fortescue Metals gave back 1.19% and Atlas Iron Limited (AGO) fell another 0.3%.

Newcrest Mining Limited (NCM) lifted by 1.12% to $22.63 and St Barbara Limited (SBM) lifted by 1.09% to $1.38. AngloGold Ashanti Limited (AGG) added 4.5% to $5.75.

In the S&P/ASX 200 Financials lifted 0.5% higher. Commonwealth Bank of Australia (CBA) lifted to $62.21 up 0.74% while ANZ Banking Group (ANZ) added 0.44% to $25.38 and Westpac Banking Corporation (WBC) added another 0.3% to $26.44. Insurer QBE Insurance Group Limited (QBE) gave back 0.74% to $11.44 while Insurance Australia Group Limited (IAG) up 1.7%.

On the economic front - today´s Consumer sentiment report from Westpac and the Melbourne Institute showed consumer confidence rose modestly from in January, up 0.6% to 100.6.

Confidence was decidedly more upbeat across states: Consumer confidence rose sharply in Queensland, Western Australia and South Australia, and recorded healthy gains in NSW and Victoria.

At first glance the latest reading on consumer confidence suggests that not much has changed in the past month. But nothing could be further from the truth. Digging a little deeper it is clear that there is an underlying level of optimism across the country. Interestingly the national reading on consumer confidence (which is seasonally adjusted) was largely unchanged but all the states recorded substantial gains in confidence. For instance, consumer confidence rose sharply in Queensland up by almost 10 per cent with Western Australia and South Australia not far behind. Even NSW and Victoria record a healthy gain in confidence. In short, the state readings which are in raw terms show a healthy improvement and what we can infer is that the national result seems to mask the strength in confidence and should shine through in the next couple of months

The Australian dollar (AUD) is holding up well at US$105.65cents, €79.50cents and £65.75 pence.

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