Australian Stock Market Report – Midday 2/22/2013

MID-SESSION REPORT
(12pm AEDT)

The Australian sharemarket is starting to record a comeback following yesterday's hefty 2.2 per cent slump. The All Ordinaries index (XAO) is up 1.2 per cent or 58.6 pts to 5057.2. Concerns were high yesterday, which resulted in the local market's biggest daily pullback since May 2012. This Sunday's Italian leadership election was keeping investors at bay while U.S Congress has barely a week to deal with the Fiscal Cliff spending cuts drama.

Global market lost ground last night, with the Dow slipping by 0.3 per cent, Germany's DAX dropped 1.9 per cent while Italian shares slumped by 3.1 per cent.

We're coming to the end of week three of the profit reporting season, with surfwear retailer Billabong (BBG) issuing its profit numbers this morning. Investors were disappointed with a $536.6M loss between July and December 2012, with its shares down 3.85 per cent or 3.5 cents to 87 cents. BBG shares are still up 4.8 per cent this year however have had a terrible couple of years with numerous failed takeover attempts. Crown, Santos and Sky Network Television also released profit results today.

Yesterday, lotteries and gaming company, Tatts Group (TTS) reported a 23% drop in Net Profit to $128M between July and Dec 2012. The result was held back mid last year following the expiry of its Victorian pokies license and was largely in-line with market expectations. Higher than expected revenue was driven by its Lotteries unit; the standout division. Lotteries made up 55% of total sales & increased by 38% on 2011. The unusual run of 21 jackpots at or above $15M helped boost ticket purchases for its Powerball and Oz Lotto games. Last November, TTS said it would pay $427M for the right to operate the Keno service in SA for the next 40 years; contributing $3.4M to earnings in the last fortnight of 2012. An interim dividend of 8cps will be paid to eligible shareholders on 5 April. TTS experienced 52% growth in online lotteries revenue and continues to shift to its more cost effective online channel. TTS shares lost ground following the result, however are still up close to 8% this year. TTS is up 2.15 per cent or 7 cents today to $3.32.

The miners are holding the market back, while almost all other sectors are recording some improvements. BHP Billiton (BHP) is down 0.16 per cent or 5 cents to $37.12 and continues to find cracking $38.00 per share a challenge. Since July 2011, BHP shares have struggled to remain above the $38.00 level for more than a few days at a time. Australia's second biggest miner, Rio Tinto (RIO) is flat at $67.32 while Fortescue (FMG) and Newcrest Mining (NCM) are both rising.

The big four banks are the biggest contributors to the gains, with Westpac (WBC) up 3.09 per cent or 90 cents to $30.38. Commonwealth Bank of Australia (CBA) is up 2.62 per cent or $1.71 to $66.51, National Australia Bank (NAB) is rising by 2.35 per cent or 69 cents to $30.11 while ANZ Banking Group (ANZ) is 2.11 per cent or 59 cents higher to $28.57.

On the economic front, the Reserve Bank Governor made it quite clear interest rates are likely to remain on hold until at least the middle of the year. The market is currently factoring in a 20 per cent chance of a rate cut in March. Mr Stevens pointed to the recent rise in property prices and improvements in the sharemarket.

Following the start of daylight savings in October, major markets in the region will be trading between the hours mentioned below until April 2013.

The Hong Kong sharemarket trades in two sessions each day and will now open for trade between 12.30pm (AEDT) and 3pm (AEDT) while the second session is between 4pm (AEDT) and 7pm (AEDT).

Out of Japan, the first session will be between 11am (AEDT) and 1pm (AEDT) while the second session is between 2.30pm (AEDT) and 5pm (AEDT).

The Singapore exchange will be open for trade between 12pm and 3.30pm (AEDT) for the first session and then between 5pm and 8pm (AEDT) for the second.

U.S futures are currently pointing to a slightly stronger start to trade tonight. The U.S market trades between 1.30am (AEDT) and 8am (AEDT).

So far in trade at lunch, 753 million shares have been traded worth just $4.3 billion. 458 shares are up, 278 are lower and 313 are currently unchanged.

The Australian dollar (AUD) buys US102.7 cents, €77.9 cents and £67.3 pence.

The AUD is the world's fifth most traded currency behind the U.S dollar, the Euro, Japanese Yen and British Pound. The AUD accounts for around 7 pct of all foreign exchange trades.

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