Australian Stock Market Report – Midday 2/18/14

MID-SESSION REPORT
(12pm AEDT)

The Australian sharemarket is rising for the third straight day and for the eighth time in nine trading sessions. The All Ordinaries Index (XAO) is up 0.1 per cent and the index is back above 5400pts for the first time in three months. Strong gains within the mining sector is driving the broader market higher at lunch. Investors looked to Europe for a lead, due to the closure of the U.S. markets (Presidents Day public holiday). Shares in the UK jumped by 1.1 per cent.

The earnings season is heating up, with some of the biggest corporate names in Australia issuing half year or full year results.

The world's biggest miner and now (once again) Australia's biggest listed company, BHP Billiton (BHP) is up by 2 per cent thanks to an 82.9 per cent rise in half year profit. Profit rose to US$8.1 billion and revenue was up 5.9 per cent to US$33.95 billion. BHP now has US$10.9bn of cash on its books (almost twice as much as in June 2013). Many of the miners have cut capital investments and put certain projects on hold to reduce costs and improve productivity. BHP is now trading at a 12 month high.

Beverage and packaged food company, Coca-Cola Amatil (CCL) is down 6 per cent after announcing a bigger than expected 82 per cent slump in full year profit to $79.9 million. The result was held back by a $404 million write-down of its SPC Ardmona assets. A $0.32 per share dividend was still announced. Revenue slipped by 1.1 per cent.

Global packaging business, Amcor (AMC) has increased profit by more than 20 per cent to $326 million. Strong growth in emerging markets and benefits from recent acquisitions are helping. AMC shares slumped by 5.19 per cent regardless, wiping out some of the 12 per cent improvements recorded since the start of September 2013.

On the economic front, the Reserve Bank of Australia (RBA) has issued the minutes from the 4 Feb monetary policy meeting. The RBA considers the local economy to be gaining strength and sees a falling Australian dollar as a positive. Funnily enough, the Australian currency jumped from US90.3c to US90.7c this morning.

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