Australian Stock Market Report – Midday 1/9/2013

MID-SESSION REPORT
(1pm AEDT)

Local stocks pulled back yesterday with the All Ordinaries Index (XAO) finishing down 25 points. At the start of trade today the Aussie market gained 15 points and is currently holding on to these early gains even with the weaker than expected read on November retail sales hitting the market.

On US markets overnight all about the upcoming US 4th quarter reporting season that commenced just after the close of trade today. Alcoa kicked off the quarter reporting season with a very strong result.

Alcoa's earning were in line with expectations and it revenue surpassed. Alcoa reported revenue of US$5.9Billion better than the US$5.6Billion expected by the market. Alumina Limited (AWC) has a small partnership with Alcoa and today the stock rallied higher up 4.85% to $102.7, an 8 month high. Alumina also said its AWAC's (joint venture) production of alumina for the fourth quarter was 3.9 million tonnes.

The big news story over the last few days has been the run up in the Iron ore price. In the last 4 weeks iron ore have rallied 35%. The 62% Fe, CFR China price listed another $4.60 overnight to US$158.50/tonne, the highest level since October 2011. Today the big name miners were again quiet with BHP Billiton Limited (BHP) off 0.03% to $37.49 after falling in UK trade overnight and Rio Tinto Limited (RIO) up 0.05% to 66.33. The best gains in iron ore stocks today occurred in the small to mid- level miners with Atlas Iron Limited up 0.57% to $1.76 and Northern Iron Limited (NFE) up 1.7%.

Overnight the gold price rallied higher after 4 days of losses in US trade and is now holding at US$1,660 an ounce and the silver price also moving higher. Once again we have not seen the larger miners in this sub sector rallying higher today, but the smaller players are doing well. OceanaGold Corporation (OGC) saw its price lift by 5.8% and Regis Resources Limited (RRL) up 1%.

Energy stocks fell with Woodside Petroleum Limited (WPL) off 0.5% to $34.75 and Origin Energy Limited (ORG) off another 1.33 to $11.87 while Santos Limited (STO) lifted by 0.5% to $11.39.

Banking stocks were mixed at lunch with S&P/ASX 200 Financials sector adding 0.5%, shares in the Commonwealth Bank (CBA) continuing to fall from recent highs now at $61.35 and Australia and New Zealand Banking Group Limited (ANZ) also lower. National Australia Bank Limited (NAB) lifted and Westpac Banking Corporation (WBC) added 0.9% to $26.52. Suncorp Group Limited (SUN) added 1.5% and QBE Insurance Group Limited (QBE) lifted by 0.26%. Mirvac Group (MGR) was the best performer in the property space up 3.4% to $1.52.

Retailer were mixed ahead of the November retail sales numbers then after the release we saw weakness in the specialist retailers while the food and drink operators still hold on to gains. Woolworths Limited (WOW) lifted by 1.3% to $29.81and Wesfarmers Limited (WES) increased over 0.5% to $37.09. Kathmandu Holdings Limited (KMD) firmer by another 2.5% to $1.66 and JB Hi-Fi (JBH) up 0.8pct to $10.63. Harvey Norman Holdings Limited (HVN) came off another 3.3% and Myer Holdings Limited (MYR) off 2.48%.

In economic news today, The Housing Industry Association (HIA) new home sales report for November showed an increase of 4.7%, the biggest back to back rise in sales in 3 years. The report also showed detached home sales were up 7.7% while multi-unit sales fell by 6.9%.

The Australian Bureau of Statistics Australian retail spending index showed a fall of 0.1% in November to $21.533Billion. The breakdown showed takeaway stores and cafes registered a small lift in sales but household goods sales off 0.9%, and clothing, footwear and personal goods slipped 0.6% with department stores also showing weaker sales.

The Australian dollar (AUD) is stronger and buys US105.03 cents, €80.30 cents and £65.42 pence, after short lived falls in the Aussie against the US dollar after the weaker than expected Retail numbers.

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