Australian Stock Market Report – Midday 2/14/14

MID-SESSION REPORT
(12.45pm AEDT)

The Australian sharemarket is up by 0.9 per cent at lunch, taking the gains since mid-last week to 5.4 per cent. All sectors are in the black, with the mining industry once again outperforming.

Australia's second largest resource company, Rio Tinto (RIO) issued a better than expected US$10.2bn full year underlying profit for the 12 months to December 2013. The result was driven by US$2.3 billion worth of cost cuts, record iron ore shipments and a weaker Australian dollar. Iron ore, which is used to make steel is Australia's leading/largest export and accounted for 96 per cent of RIO's underlying profit. RIO is the country's biggest ore producer - ahead of both BHP Billiton (BHP) and Fortescue Metals (FMG). RIO mines around 30 per cent more ore than BHP and twice as much as FMG. Cost saving initiatives increased iron ore earnings by US$240m. Iron ore was volatile last year however staged a recovery from June to only slip by around 7 per cent by December 2013. Copper is RIO's second most important commodity; however aluminium has been the best improver. Aluminium contributed US$557m to RIO's earnings. A fully franked final dividend of AU120.14c was declared, payable to eligible shareholders on 10 April. RIO is up by 0.3 per cent.

The country's largest gold miner, Newcrest Mining (NCM) recorded an 88 per cent slump in its half-year profit to $40 million. NCM partly blamed a significant 13 per cent in the gold price, a tax charge and write-down for the disappointing outcome. NCM slipped by 1.78 per cent.

BHP Billiton (BHP), Australia's largest miner and second biggest company is issuing its profit results next week. The major banks are all higher, with ANZ Banking Group (ANZ) and Westpac (WBC) the standouts with 0.7 per cent gains.

On the economic front, a comprehensive report on lending was issued today. Total lending finance rose by 2.3 per cent in December after rising by 5.6 per cent in November. Business loans rose by 28.7 per cent in December (6 year high) while home loans are up 19 per cent on a year ago. Despite the worse than expect job report yesterday, the Reserve Bank is likely to remain on the interest rate cutting sidelines.

The Australian dollar has crept back above US90c. 1.06 billion shares have been traded, worth $2.36 billion. 513 stocks are higher, 301 are in the red and 337 are flat.

[Kick off your trading day with our newsletter]