Australian Stock Market Report – Midday 12/3/13

Mid Session Report
(12:00)

The early hours of trade on Tuesday saw a tussle develop between buyers and sellers. The lows were put in place in the first half hour of trade. The index recovered thereafter although in the run up to lunch the market made news session lows, indicating that the afternoon could be spent exploring areas of technical support.

Mining stocks are the underperformer du jour despite better readings on Manufacturing. Recent days have seen a range of manufacturing measure releases across the northern hemisphere. Manufacturing purchasing managers' indices (PMIs) for November began to be released Saturday. China's PMI measures steadied in November but remained in expansion territory and above forecasts. The US Institute of Supply Management (ISM) survey came in well ahead of expectations. Manufacturing PMIs across the Eurozone, Japan and the UK all cycled higher into expansion territory. The readings are consistent with ongoing growth in economic activity and commodity demand. The weaker tone for the resource sector is being informed by the increased likelihood that the Fed will taper its Q.E program in the near term. The resultant increase in the US dollar has put downward pressure on most commodity prices in the last day.

In the mining space gold stocks are leading the way lower. Gold prices have recovered somewhat in early Asian trade having fallen by $30 an ounce overnight. Prices are now within sight of 3 year lows, again a reaction to the prospective Fed tapering. Newcrest Mining (NCM) has shed more than 6%, St Barbara Limited (SBM) is down almost 2%

Retail sales rose more than expected in October. The ABS said retail spending lifted 0.5 per cent in October. The market was expecting a 0.4% increase after a 0.8 per cent lift was reported in September. Spending on food, restaurants and takeaway food services rose in addition to clothing, footwear and personal accessories. Consumer related sectors were unmoved by the better reading. The Consumer Staples and Discretionary sectors were each down by 0.3%.

The Aussie dollar continues to fall notwithstanding the better reading on retail sales. The local unit made new lows for the session trading at 90.86 US cents.

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