Australian Stock Market Report – Midday 1/17/2013

MID-SESSION REPORT
(12pm AEDT)

Despite the release of some disappointing employment numbers this morning, the Australian sharemarket is improving for the third time this week, with the All Ordinaries Index (XAO) up by 0.7 per cent or 34.1 pts to 4799.1. Most sectors are trading higher, with the exception of the telcos which are slipping modestly.

Global markets finished mixed overnight, with the Dow and the FTSE index in the U.K both easing by 0.2 per cent while Germany's DAX and France's CAC40 gained by close to 0.3 per cent. There was a barrage of data out of the U.S overnight, from inflation to industrial production; neither of which surprised the market. On the earnings front, both Goldman Sachs and JP Morgan Chase improved after announcing better-than-expected profit results. Online marketplace, eBay also beat expectations after announcing an 18 per cent rise in sales to $3.99 billion.

Commodity prices were mostly lower overnight, however gains from the likes of BHP Billiton (BHP) and gold miner Newcrest Mining (NCM) is helping to keep the sector positive. BHP is up 0.99 per cent or 36 cents to $36.61 while NCM is up 1.3 per cent or 31 cents to $22.96. Rio Tinto (RIO), which makes about 70 per cent of its profits from mining iron ore is down 0.69 per cent or 45 cents to $65.10. Australia's third biggest iron ore miner, Fortescue Metals Group (FMG) is down 1.31 per cent or 6 cents to $4.51. The price of iron ore slipped to around US$145/t overnight off the back of speculation that warmer weather would allow better growth of supply in China.

Energy players, Woodside Petroleum (WPL) and Santos (STO) both issued fourth quarter production numbers today; seemingly pleasing the market. STO is up 1.46 per cent or 17 cents to $11.81 while WPL is up 0.54 per cent or 19 cents to $35.39. Revenue in the fourth quarter for WPL rose by 43 per cent compared to the corresponding period in 2011. Production was up 46 per cent. Revenue for STO jumped to $876 million for the previous quarter and the company reaffirmed its capital expenditure (CAPEX) forecast of around $4 billion.

Takeover target, Billabong (BBG) is up 3.63 per cent or 3.5 cents to $1.00 following a slight pullback yesterday. BBG received a $526 million takeover offer from a U.S group early in the week. Its shares are up 16.28 per cent so far this week.

The big four banks are all improving, with ANZ Banking Group (ANZ) up 0.93 per cent or 23.5 cents to $25.59 while Commonwealth Bank of Australia (CBA) is up 0.95 per cent or 59 cents to $62.88. Westpac (WBC) is up 0.91 per cent or 25 cents to $26.68 while National Australia Bank (NAB) is 0.66 per cent or 18 cents higher to $26.02.

On the economic front, the latest employment report issued this morning came in worse than expected. The jobless rate rose to 5.4 per cent while 5,500 jobs were lost over December. The market was expecting a slight rise in the number of jobs created. The Australian dollar reacted immediately and has fallen from US105.6 cents at 11.29am (AEDT) to US105.4 cents by 11.35am (AEDT). The market is now factoring in a 37% chance of a rate cut on 5th February when the Reserve Bank of Australia (RBA) will meet next.

Following the start of daylight savings in October, major markets in the region will be trading between the hours mentioned below until April 2013.

The Hong Kong sharemarket trades in two sessions each day and will now open for trade between 12.30pm (AEDT) and 3pm (AEDT) while the second session is between 4pm (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 and 3.30pm (AEDT) for the first session and then between 5pm and 8pm (AEDT) for the second.

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

So far in trade at lunch, 724 million shares have been traded worth just $2.26 billion. 415 shares are up, 337 are lower and 285 are currently unchanged. The value of shares traded is higher than usual (for this year) due to index option expiry.

The Australian dollar (AUD) has fallen following disappointing employment numbers out at this morning and buys US105.4 cents, €78.2 cents and £65.8 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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