Australian Stock Market Report – Midday 12/28/2012

MARKET OPEN REPORT
(10.30am AEDT)

Despite falls on Wall Street overnight, local stocks are holding onto 17 month highs in thin trade.

US markets had a volatile session overnight on Fiscal Cliff concerns, with stocks paring back earlier losses as the House of Representatives agreed to reconvene in Washington on Sunday, sparking hopes of a scaled back deal to avert the so-called cliff, which economists fear could send the US back into recession.

In early trade, the All Ordinaries Index (XAO) is up 19.3pts or 0.4pct to 4680, its highest level since July 2011.

Mining stocks are leading the way, with base metals generally firmer in London trade overnight. Index leader BHP Billiton (BHP) has gained 0.7pct to $37.25 while Rio Tinto (RIO) is up 1pct to $66.10 and iron ore miner Fortescue Metals Group (FMG) continues to gain, up another 1.1pct to $4.58. FMG yesterday announced plans to resume wok to expand the Kings deposit at its Solomon iron ore mining hub in January next year following a rebound in commodity prices. Iron ore rose US$4/metric tonne overnight to US$139/mt.

Retail stocks led the way yesterday on reports of stronger than expected Boxing Day sales. In early trade discount retailer JB Hi-Fi (JBH) is up 2.1pct to $10.48 while Harvey Norman (HVN) has gained 0.3pct to $1.89. David Jones (DJS) is lower by 0.4pct to $2.40 while Myer Limited (MYR) is steady at $2.13.

The Aussie dollar remains subdued with no economic data out again today. At 10.30am AEDT the Aussie is buying US103.73c, £0.6441 and €78.34c.

On the market overall; just 150 million shares have changed hands so far, worth $195 million. 311 are up, 147 are down and 196 are unchanged.

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