Australian Stock Market Report – Midday 2/27/2013

MID-SESSION REPORT
(12pm AEDT)

The Australian share market has rebounded from yesterday's drop triggered by concerns over Italy's political gridlock. Positive US economic data and assurances by the Fed chairman has given the local market a lift. By midday, the All Ordinaries index (XAO) is up 0.52pct or 25.9pts to 5047.7pts.

Offshore, US sharemarkets rose on Tuesday as Federal Reserve Chairman Ben Bernanke confirmed the current quantitive easing program was showing clear benefits for the US economy, and reiterated the necessity to continue economic stimulus in testimony to Congress. US Consumer confidence lifted in February to a 3-month high of 69.6. And new home sales jumped to 437,000 annual rate in January, a high since July 2008. The Dow Jones was higher by 116pts or 0.8pct with the S&P 500 index up by 0.6pct and the Nasdaq was up by 14pts or 0.4pct.

European shares fell on concerns of instability in Italy's economy as forecasts of either an unsteady coalition government or fresh elections within months is likely. The benchmark FTSEurofirst 300 index fell by 1.4pct to three-month lows with the UK FTSE index down by 1.3pct while the German Dax lost 2.3pct and the Italian FTSE MIB index lost 4.9pct.

Today, Westfield Group (WDC) has reported a lift in net profit from the previous corresponding period to $1.72 billion, up 18.3pct. Revenue for the period was down a steep 43.1% and the company will continue to redeploy capital from further joint ventures and non-core asset disposals in the year ahead. The group manages 105 shopping centres in five countries and continues to receive demand for space both locally and internationally. The shopping centre developer made several changes to its property portfolio in 2012 in an effort to improve returns to shareholders. Westfield Group has declared a final dividend of 49.5 cents. WDC shares are trading at $11.135, up 0.5pct.

UGL Limited (UGL) has posted a first half net profit of $26 million for the six months to December 31. The result is a 53pct drop from the previous corresponding period and is largely due to $25 million in costs from a restructure. Cost overruns on a number of infrastructure projects also contributed to the weaker performance. Management has confirmed these projects are now either completed or near completion and UGL is returning to normal trading in the second half. Volatility in commodity prices has also impacted the company's engineering projects, causing cancellations and delays. The firm has announced an interim dividend of 34 cents, 50pct franked. UGL shares have lost ground following the result and are down 3.3pct today to $10.54.

In economic news, construction work done fell marginally in the December quarter by 0.1pct to $51.85 billion as indicated by the Australian Bureau of Statistics (ASB). Economists had forecasted a 1.5pct rise. ASB data shows construction work done is now 11.9pct stronger than the previous corresponding period. Total building work done in the September quarter was up 1.8pct to $20.04 billion, while engineering work done was down 1.3pct to $31.82 billion.

The Australian dollar (AUD) buys US1.02 cents, €0.78 cents and 67.5 pence.

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