Australian Stock Market Report – Midday 12/5/13

MID-SESSION REPORT
(12.30pm AEDT)

The Australian sharemarket is in the red, with the All Ordinaries Index (XAO) down by 0.5 per cent at lunch. Strength in the mining sector is helping minimise market losses, with the industry up 0.55 per cent, while a 1.2 per cent slump across the financials is holding back the market most.

Funnily enough, better than expected economic news out of the U.S. overnight is part of the reason for today's weakness. There were 215,000 jobs created in the private sector last month according to the monthly ADP employment report; 40,000 more than expected. This makes it more likely that the Fed (in theory) could think about reducing stimulus sooner rather than later; however tomorrow night's official government employment report is likely to shed more light on the issue.

Qantas (QAN) is today's biggest loser, with its shares down 12 per cent following the airline flagging a $300 million half year loss for the six months to December 2013. Chief Executive, Alan Joyce expressed his concerns, saying that urgent action is needed. Passenger numbers have fallen, conditions are challenging and 1,000 job cuts are on the cards. QAN has plans to reduce costs by US$2 billion over the next three years.

Electronics retailer, Dick Smith (DSH) is up 2.27 per cent on its second day of trade as a standalone company. At $2.25 per share, it is trading 5c/share above the issue price offered to investors in the initial float.

Westfield (WDC) surged by 4 per cent yesterday on restructure plans to group its Australian and New Zealand businesses together, essentially splitting from its more promising international business. WDC bought the remaining 50 per cent of the World Trade Center Retail Hub for US$800 million. WDC is currently down 1.76 per cent.

At lunch, 1.1 billion shares have been traded, worth $2.33 billion. 380 stocks are higher, 408 are in the red and 306 are unchanged.

The Australian dollar buys US90.4 cents and is sitting close to a 3 month low against the greenback. The greenback surged overnight due to the healthy job numbers announced on Wednesday.

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