Australian Stock Market Report – Midday 2/12/14

MID-SESSION REPORT
(12.45pm AEDT)

The Australian sharemarket is modestly higher at lunch, with the All Ordinaries Index (XAO) up 0.4 per cent, taking the gains since last Thursday to 4 per cent. U.S. stocks jumped by 1.2 per cent (only the second time this calendar year the DOW has gained in excess of 1 per cent). U.S. Fed chief Janet Yellen delivered her first testimony before congress and calmed the market. She didn't mince her words and seemed set to continue with the tapering while expressing her concerns relating to the jobs market.

The highlights today include Australian economic news, Chinese trade data and profit results from 15 large listed companies. Copper miner, OZ Minerals (OZL) is up by 11.1 per cent after delivering a smaller than expected $62.5 million half year loss. A 10c/share dividend was announced. Biopharmaceutical firm, CSL is down 3.4 per cent after falling short of consensus, with a modest rise in profit to US$646 million. Property group Stockland (SGP) is up 2.7 per cent thanks to its return to profitability ($298 million first half profit). The world's biggest share registry business, Computershare (CPU) announced a 9.6 per cent rise in profit to $163.6 million. A rise in market activity and cost efficiencies in the tail-end of the calendar year were two drivers. CPU earns close to 40 per cent of its income in the U.S, however the recent surge in the strength of the greenback (since stimulus speculation started in May last year) has been a negative for earnings. CPU records its profit numbers in U.S. dollars.

The defensive healthcare sector is the worst performer due to the underperformance of CSL (largest company in the industry).

The miners are the standouts, with both BHP Billiton (BHP) and Rio Tinto (RIO) rising by around 1.5 per cent while iron ore miner Fortescue Metals (FMG) is 1.06 per cent firmer. These gains are offsetting a 4.1 per cent slump from gold producer Newcrest Mining (NCM). Despite today's slump, NCM is still up 6 per cent this week. NCM will be issuing its earnings this Friday.

On the economic front, consumer confidence has slumped by 3 per cent in February. The initial jump in sentiment following the September federal election seems to have died down.

The Australian dollar buys US90.2 cents; a close to one month high against the greenback.

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