Australian Stock Market Report

MIDDAY REPORT (12pm AEDT)

The Australian sharemarket is unfortunately wiping out all of yesterday's gains with the All Ordinaries index (XAO) down 1.4 pct or 60.1 pts to 4251.3. Monday's improvement was like a ray of sunshine squeezing its way through an otherwise very cloudy sky.

Ratings agency, Moody's has been busy over the past few days and has already downgraded three of France's largest banks. Overnight, Moody's said it would be reviewing the ratings of European nations after last week's European summit left it unsatisfied that sufficient progress is being made.

All sectors are losing ground, with energy and material stocks the worst performers in percentage terms. Australia's second largest miner, RIO Tinto (RIO) is down 2.21 pct or $1.42 to $62.71 while the larger BHP Billiton (BHP) is 2.08 pct or 76 cents weaker to $35.77.

The four big banks are struggling with Westpac (WBC) down 2.21 pct or 47 cents to $20.82, National Australia Bank (NAB) is 2.01 pct or 50 cents lower to $23.86, Commonwealth Bank of Australia (CBA) is 1.34 pct or 66 cents weaker to $49.17 while ANZ Banking Group (ANZ) is easing by 0.57 pct or 12 cents to $20.83.

It will be a busy day on the economic front today, with the latest report on the confidence levels of Australian businesses released. We will also find out how many new loans were issued in October economy wide and the number of new properties which started being built over the previous quarter.

On the rural front last night, U.S grain markets finished slightly weaker. The unstable situation the Europeans find themselves in is not doing commodity prices in general any favours. The price of cotton hit a 16 month low last night and slumped by 3.5 pct. Australia is the world's fourth largest exporter of cotton behind the U.S, India and Uzbekistan.

Following the start of daylight savings at the start of October, major Asian markets will be trading between the hours mentioned below until April next year (note that over the next month, some of the times might be slightly off due to several countries in the region changing their clocks at differing periods).

The Hong Kong sharemarket trades in two sessions each day and will now open for trade between 1pm (AEDT) and 3.30pm (AEDT) while the second session is between 5.30pm (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 (AEDT) and 3.30pm (AEDT) for the first session and then between 5pm (AEDT) and 8pm (AEDT) for the second.

Asian markets are mostly lower at lunch with Japan's Nikkei 225 index down 1.46 pct or 126.45 pts to 8527.37, South Korea's KOSPI index is 1.11 pct or 21.12 pts lower to 1878.64 while shares in China are down by close to 1 pct.

So far in trade at lunch, 621 million shares have been traded worth $1.17 billion. 186 shares are up, 573 are lower and 283 are currently unchanged. Activity is remaining extremely light on the sharemarket with the situation in Europe keeping investors at bay.

The Australian dollar (AUD) is weaker and buys US100.6 cents.

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.

Steven Daghlian, CommSec Market Analyst

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