Australian Stock Market Report

MIDDAY REPORT (11.45am AEDT)

The Australian sharemarket is improving for the first time in four sessions with the All Ordinaries index (XAO) up 0.4 pct or 18.1 pts to 4215.9. Companies in the consumer discretionary sector, particularly the retailers are amongst the worst performers at lunch however.

Discount retailer JB Hi-Fi (JBH) is down 15.47 pct or $2.33 to $12.67 after giving the market a trading update yesterday and receiving a broker downgrade today. JBH's Chief Executive, Terry smart said that "Sales in the second quarter have improved but unfortunately not enough to counter the impact of the first quarter decline in sales and margin driven in large measure by a high level of discounting in the market, with some retailers pricing inventory below cost to drive foot traffic and/or clear excess inventory. Throughout this period we have maintained our low price promise to customers and, as a result, our gross margin has been impacted by 27bps for the five months to 30 November 2011 against the prior year". In large part due to today's slump, JBH shares are down 27 pct this calendar year.

Other companies in the retail space are also struggling after two hours of trade. Department store owner David Jones (DJS) is down 3.99 pct or 11 cents to $2.65 while its competitor, Myer (MYR) is 5.82 pct or 13 cents lower to $2.19. Specialty retailer, Harvey Norman (HVN) is down 4.76 pct or 10 cents to $2.00.

The miners, financials and energy players are the biggest contributors to today's gains. RIO Tinto (RIO) is up 0.77 pct or 48 cents to $61.88 while the larger BHP Billiton (BHP) is 0.48 pct or 17 cents higher to $35.23. Australia's largest gold producer, Newcrest Mining (NCM) is 1.1 pct or 35 cents stronger to $31.23 despite a weaker gold price.

Three of the four major banks are improving however Westpac (WBC) is down 0.05 pct or 1 cent lower to $20.45. National Australia Bank (NAB) is up 0.72 pct or 17 cents to $23.65, ANZ Banking Group (NAB) is 0.77 pct or 18 cents stronger to $23.66 and Commonwealth Bank of Australia (CBA) is up 0.56 pct or 25 cents to $48.88.

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 higher at lunch with Japan's Nikkei 225 index up 0.42 pct or 35.15 pts to 8412.52 while South Korea's KOSPI index is also up 0.67 pct or 12.21 pts to 1831.32.

So far in trade at lunch, 649 million shares have been traded worth $1.31 billion. 398 shares are up, 329 are lower and 322 are currently unchanged. Activity is remaining extremely light on the sharemarket with the situation in Europe keeping investors at bay.

The Australian dollar (AUD) has improved and buys US99.5 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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