Australian Stock Market Report – Midday 2/21/2013

MID-SESSION REPORT
(12.20pm AEDT)

The Australian share market opened lower this morning after a late trade selloff on US markets. US investors sold out of stocks and commodities after US Central Bank (Federal Reserve - FOMC) minutes from its January meeting showed policymaker´s held further discussions on slowing its bond buying program. The US Fed has been restimulating the US economy by buying bonds (basically printing money) and pushing it back into the economy, but if they reduce this program is could stall or slow growth. Overnight European indices also closed lower, with commodities sliding it was a tough night for precious metals after talk of a large commodity house in the states going bankrupt created fear early in the day then the Fed notes forcing more selling.

This morning the markets started weaker with the All Ordinaries Index (XAO) off 34pts at the start of trade. By lunch the All Ordinaries Index (XAO) had fallen 47points or 0.9%. Big name mining and energy firms led the falls with the S&P/ASX 200 Materials sector off 2.5%. BHP Billiton Limited (BHP) gave back another 2.9% and RIO fell 2% and Fortescue Metals Group Limited (FMG) down fell over 2.6%.

Iluka Resources (ILU) full year 2012 result showed a fall in Net Profit of 33% to $636Million. Iluka management announced it was looking at cutting 200 workers and halting loss generating projects.

Alumina Limited (AWC) released its 2012 full year results today, reporting a Net Loss of US$62.1Million on weak demand or alumina and bauxite and lower prices. Alumina did say it has seen recent interest from Chinese bauxite buyers. AWC share price was off 0.8% to $1.24.

The ASX 200 energy sector fell by 3% in early trade. Origin Energy Limited's (ORG) half year result came in weaker than expected and they surprised the market by reducing its full year guidance, shares fell by over 8.9% to $11.27.

Santos Limited (STO) share price came off by over 4% ahead of its results out tomorrow and the news that on Tuesday the New South Wales government had tightened restrictions on the production of coal-seam gas mining.

Telstra Corporation Limited (TLS) has confirmed it is sacking around 650 staff across the country. The job losses are expected to be in the struggling Sensis business and TLS shares are flat at $4.57.

Qantas Airways Limited (QAN) saw its shares lift by just over 5% to $1.70 after releasing a solid report for the 6 months to the end of 2012. Qantas nearly tripled its profit to $111Million as a result of cost saving measures. Qantas shareholders will not receive a dividend payment for the term but the company has not ruled out one in the future.

Fairfax Media Limited (FXJ) reported its first half 2013 result today. Net Profit for Fairfax increased to $383.34Million but this was really boosted by the sale of Trade Me & US Agricultural publishing unit in the last 6 months. Excluding these sales Fairfax's profit after tax fell to $83Million and Fairfax shares lost 2.3% in early trade.

Newcrest Mining Limited (NCM) fell by 2.3% to $21.66 after the US$ COMEX gold price fell below the key US$1,600 an ounce level. St Barbara Limited (SBM) fell by 5.6% to $1.26, after posting a weaker than expected first half 2013 report due to mine closures and acquisition costs.

The banking sector was weaker in morning trade while Insurance Group Limited (QBE) bucked the trend. IAG reported its first half net profit has more than tripled to $461Million. Fully franked interim dividend of $0.11c per share, IAG also expects its strong performance to continue. IAG shares up 2.21% to $5.54.

ASX Limited (ASX) reported its first half result for the 2013 financial year today, the ASX listed a 2.5% fall in profit to $171.1Million with revenue also falling by 3.3% on weaker trading volumes throughout the period. The ASX surprised the markets by lowering its dividend payment to shareholders to $0.879c off 5.3% for the prior corresponding period. ASX management did state they had seen a gradual improvement in business volumes recently. ASX shares fell 1.67% to $36.39.

The Australian dollar (AUD) is holding up well after last night's falls at US$102.5cents and €77.16cents.

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