Australian Stock Market Report – Midday 2/10/14

MID-SESSION REPORT
(12.30pm AEDT)

The Australian sharemarket is improving for the third straight day, with the All Ordinaries Index (XAO) up by 0.7 per cent. The miners are the best performers while weakness from the property trusts, utilities and consumer staple businesses are keeping a cap on the gains.

A surge from global markets (particularly U.S. equities) has been a major catalyst for this morning's rise. A disappointing U.S. jobs report on Friday night wasn't enough to hold back optimistic investors. There were only 113,000 jobs created in Jan; 70,000 fewer than hoped for. This was once again partly blamed on recent bad weather dampening hiring. The jobless rate fell to the lowest level since Nov 2009 (6.6 per cent); largely influenced by a shrinking market. Many economists are convinced the U.S. economy will be an outperformer in 2014.

One of Australia's biggest uranium miners, Paladin Energy (PDN) has suspended production at a mine in Malawi (southeast Africa). It blamed the decision on both a weaker uranium price and significant costs associated with its operation. The price of uranium has halved in value in just three years following Japan's Fukushima Daiichi nuclear disaster in March 2011. PDN shares are 5.1 per cent higher in response to the cost cutting measure.

The major banks are the main contributors to the improvements with the big four adding 12.8pts to the All Ordinaries Index (XAO) this morning. The Australian newspaper reported that NAB is considering a $3.7 billion float of its underperforming UK division. Tomorrow, ANZ Banking Group (ANZ) will be releasing an update on its performance while Commonwealth Bank (CBA) will be announcing its interim profit numbers on Wednesday.

The price of oil (U.S. Nymex) has cracked the US$100/b mark for the first time in a month and a half. The price of gold has edged higher to US$1,265/ounce while base metals also rose modestly. Australia's largest miner, BHP Billiton (BHP) is up 0.89 per cent, while the smaller RIO Tinto (RIO) is 1.08 per cent firmer. Luxembourg-based steel producer, ArcelorMittal posted a US$1.2 billion loss between October-December 2013. On a positive note, the business has issued upbeat profit forecasts for the full year and said it is looking for deals.

The Australian dollar busy US89.4 cents; US2c firmer than a week ago.

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