Australian Stock Market Report - Midday 12/01/2011

MIDDAY REPORT (12.30pm AEDT)

The Australian sharemarket is gaining for the fourth consecutive day with the All Ordinaries index (XAO) currently up around 2.2 pct. This makes it the fourth consecutive session of improvements locally and means that Australian shares have jumped by around 5 pct so far this week. All sectors are currently trading higher.

The main reason for the impressive gains is the fact that six central banks came together overnight and pledged to provide access to U.S dollars at a lower cost for the European lenders. This by no means changes the structural and fundamental problems in the Eurozone however does buy time for officials to put together a viable solution.

Shares in the U.S rose by more than 4 pct while European markets gained by as much as 5 pct (with Germany´s DAX index) the standout. Markets continue to remain very volatile. Just last week Australian shares performed terribly and plummeted by almost 4.5 pct.

Other news out of Europe was overshadowed by the unified announcement from the global central banks. Europe´s unemployment rate rose from 10.2 pct to 10.3 pct overnight which was worse than expected. The European Union finance ministers met in Brussels to discuss solutions to debt problems.

The S&P/ASX 200 Materials index (a measure of how the miners are performing in Australia) is up 3.59 pct or 392.2 pts to 11322.3 and is the best performing region of the market. The world´s biggest mining company, BHP Billiton (BHP) is up 4.04 pct or $1.41 to $36.33 while RIO Tinto (RIO) is 4.43 pct or $2.78 higher to $65.73. RIO successfully has increased its stake in Canadian uranium miner, Hathor Exploration to 70.2 pct.

Foster´s (FGL), the owner of brands such as Carlton, Pure Blonde and VB has received the go ahead from shareholders for the $10.48 billion takeover by London based brewer SABMiller.

The Australian dollar (AUD) currently buys US102.2 cents. At this time last week the AUD was buying just US97.3 cents which just shows you how quickly things can change.

Steven Daghlian, Commsec Market Analyst

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