Australian Stock Market Report – Midday 2/15/2013

MID-SESSION REPORT
(1pm AEDT)

The Australian share market opened slightly lower this morning after a mixed night on overseas markets. Overnight European indices were hit by the news that growth in the Eurozone had contracted by 0.6% in the final quarter of 2012. This was not good news after a report earlier in the day showed the Japanese economy also contracted in the December quarter of 2012.

US market trading was awash with large company announcements, with the news market guru Warren Buffett´s investment firm Berkshire Hathaway is set to buy, food giant, Heinz for US$28billion n deal. Along with the news that US Airways and American Airlines have agreed to joining forces in a deal worth US$11 billion to create the world´s largest airline. But investor concern over weak growth out of European pushed the DOW JONES in top the red by the close of trade.

By lunch the All Ordinaries Index (XAO) had given back 6 points to 5,051 points. S&P/ASX 200 Materials sector was in the red off 1%.

Rio Tinto Limited (RIO) lost ground in London trade overnight, fell 0.3%, after RIO reported a $2.9Billion loss in 2012. RIO's full year result took a big hit from the US$14.4bn write-down on the value of its aluminium and coal assets. Today the RIO share price lost over 2.3% in early trade as Aussie investors digested the news. Rivals in the iron ore space BHP Billiton Limited (BHP) and Fortescue Metals Group Limited (FMG) down fell over 2%. Atlas Iron Limited (AGO) off 3.4% and Alumina Limited (AWC) gave back some of its recent gains. Yesterday CITIC Group, the Chinese government-owned investment group lifted its stake in Alumina to just over 13%. Newcrest Mining Limited (NCM) fell by 1.2% to $23.00 and St Barbara Limited (SBM) fell by 1.3% to $1.48.

The banking sector also in the spot light after Australia and New Zealand Banking Group Limited (ANZ) released its quarterly banking update. ANZ told the market it expects to report cash earning for $1.53Billion, for the December quarter 2012. Today the bank reported its "unaudited" numbers which are usually very close to the final results that will be released in around 6 weeks. ANZ listed "unaudited" statutory profits of $1.36Billion. The company said the company continued to perform well despite soft economic condition in Australia and New Zealand. ANZ shares off 0.39% to $27.95. The other 3 big name banks moved higher in early trade, Commonwealth Bank of Australia (CBA) up 0.5% and Westpac Banking Corporation (WBC) lifted by 0.9% to $29.05. AMP Limited (AMP) added 2% and QBE Insurance Group Limited (QBE) up 0.8% to $13.45.

After reporting its half year numbers yesterday, retailer and energy firm, Wesfarmers Limited (WES) saw its shares lift by over 1.4% in early trade to $39.43. Wesfarmers retail rival Woolworths Limited (WOW) gave back 0.33% to $32.76 and food manufacturer and distributor, Goodman Fielder Limited, saw its share price lift by nearly 3% to $0.70.

Surf wear retailer, Billabong's (BBG) share price rallied higher today up 0.5%. In the retail space, David Jones Limited (DJS) lifted by 0.4% to $2.68 and Myer Holdings Limited (MYR) added 1.13%.
Energy firm Linc Energy (LNC) reported its quarterly production and financial results today. For the December quarter 2012 Linc's daily sales averaged 3,784 gross (2,800 net) BOEPD (99% oil), with average sales price was for the quarter of $101.53 per barrels of oil equivalent (BOE). Linc's share price fell 1.3%in early trade to $2.26.

Western Australian based uranium miner, Paladin Energy (PDN) reported a $223.6M net loss between July and December 2012. The country´s largest uranium miner supplies around 4% of the world´s mined uranium, however hasn´t produced an annual profit since 2004. The cost of production remains an issue at its 2 operating mines despite a rise in production at both its Langer Heinrich project in Namibia, & Kayelekera mine in Malawi, Africa. This has been largely due to uranium prices slumping by 35% since Japan´s Fukushima Daiichi near meltdown in March 2011. PDN hasn´t been able to cut costs sufficiently to counteract this slide in prices. The gradual distancing from nuclear power for nations such as Germany and Japan also hurt the sector. PDN does not pay a dividend to shareholders. Despite its shares rising by around 17% since the start of January 2013, it has plummeted by 76% on the local market since 2011. PDN is expecting to cut costs by between US$60M & US$80M in addition to increase production over the next two years. Paladin shares fell over 4% in early trade.

The Australian dollar (AUD) is holding up well at US$103.54cents, €77.55cents and £64.5 pence.

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