Australian Stock Market Report – Midday 1/17/14

MID-SESSION REPORT
(12.20pm AEDT)

The Australian sharemarket was up for the third consecutive trading session on the open; however the gains were short lived. The All Ordinaries Index (XAO) is now slipping by 0.2 per cent at lunch, with the miners the main supportive mechanism for stocks after 2.5 hours of trade. Weakness across almost all major sharemarkets last night and disappointing profit results from major U.S. financial institutions are contributing to the losses.

Many of Australia's biggest mining stocks are again nearing price levels which they've struggled to decisively crack through in recent times. BHP Billiton (BHP) is 2.4 per cent firmer and nearing $38.00 while the smaller Rio Tinto (RIO) is 1.25 per cent higher and not far from $67.00 (a price level only breached for a few weeks at a time since 2011).

Super Retail Group (SUL) is down 15.8 per cent following a worse than hoped for update on its first half performance. SUL said it expects annual profit to rise modestly to as much as $62 million for the year; however expressed concern with profit margins. Promotional activity has failed to produce the desire boost to sales. SUL is the owner of brands such as Supercheap Auto, Ray's Outdoors, Rebel Sport and Workout World stores and surged by 33 per cent in 2013 and 87 per cent in 2012.

The major banks account for around a third of the Australian sharemarket and are currently all in the red. National Bank (NAB) is the worst of the big four at lunch, slipping by 0.97 per cent. The other three majors are down by as much as 0.8 per cent.

The Australian dollar is remaining sluggish against the greenback; being influenced by yesterday's weaker than forecast monthly jobs report. There were more than 22,000 jobs lost in December (market was hoping for the creation of 10,000 positions). Over the past 12 months, job gains have come courtesy of part-time positions rather than full-time with businesses remaining cautious to hire.

Overnight, there were 326,000 Americans filing to receive unemployment benefits for the first time last week (largely in-line with forecasts).

At lunch, 750m shares have changed hands, worth $1.6bn. 373 stocks are up, 389 are in the red and 323 are unchanged.

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