Australian Stock Market Report – Midday 2/28/2013

MID-SESSION REPORT
(12.45pm AEDT)

The local sharemarket has opened higher today after upbeat economic data in the US lifted investor sentiment and better than expected bond auctions in Italy saw European markets rebound. At noon, the All Ordinaries Index (XAO) is up 34.6pts to 5087.7pts.

Globally, US sharemarkets rallied on Wednesday as Federal Reserve Chairman Bernanke remained steadfast in his support of the Fed´s stimulus policy. The Dow Jones closed higher by 175pts or 1.3pct with the S&P 500 index up by 1.3pct and the Nasdaq up by 32pts or 1.0pct.

European shares also rebounded as the recent sell-off prompted a round of bargain hunting. Italian bond auctions totalling €6.5 billion worth of 5yr and 10yr notes was the first test of investor demand for the country´s debt since the inconclusive Italian elections. There was a strong show of demand at the auctions. A suite of Eurozone sentiment surveys all improved further in February. The headline economic sentiment reading rose to a 9-month high of 91.1. The benchmark FTSEurofirst 300 index rose by 1.0pct with the UK FTSE index up by 0.9pct while the German Dax gained 1pct.

As the end of reporting season approaches, supermarket giant Woolworths Limited (WOW) has today reported a solid lift in first half net profit of $1.15 billion, a rise of 19pct on the previous corresponding year. Growth in market share boosted earnings in its supermarket division up 6pct to $1.65 billion. Tough conditions in the Australian and New Zealand retail sectors have not greatly impacted the group's progress in the first half. Big W, Woolworths' hotels and home improvement franchise Masters all posted strong earnings growth. The group will pay a fully-franked interim dividend of 62 cents. WOW shares rose today, up 1.38pct to $34.47.

Treasury Wine Estates (TWE) has posted an interim net profit of $52.3 million, up 30.8pct from the previous corresponding period. The company's EBITDA result of $73.4 million was down 20pct due to higher cost of goods as a result of adverse weather conditions, a tough global retail environment and a high Australian dollar. The wine firm confirmed its outlook for the second half of the year remained positive and will continue to invest for growth. The company announced an interim dividend of 6 cents, 50pct franked. TWE shares are up 5.31pct or 26pts to $5.16.

Fund Manager, Perpetual (PPT) has benefited from improving market conditions and a major cost cutting programme to post a first half net profit of $27.3 million, up 19pct in the six months to December 31. A $6 million restructuring impairment and a $5.2 million non-cash cost relating to the closure of its Dublin operations impacted the result. Perpetual's cost cutting initiative has resulted in 450 jobs cuts and $12.3 million annualised saving each year. The company has declared a fully-franked interim dividend of 50 cents. Following the result, PPT shares hit a four year high of $42.30. PPT shares are currently up 5.12pct or 202pts to $41.48.

On the economic front, according to the Housing Industry Association (HIA) new home sales rose for the fourth consecutive month up by 4.2 per cent in January after a 6.2 per cent gain in December. Over the past four months new home sales have risen by 17 per cent - the strongest four month lift in home sales in almost four years.

The Australian Bureau of Statistics (ABS) has reported a 1.2pct fall in new private capital expenditure for December to $40.99 billion. The market had expected a 1.1% rise in CAPEX for the quarter. Private capital expenditure is now 10pct higher than it was in the previous December quarter.

The Australian dollar (AUD) buys US1.027 cents, €0.781 cents and £0.677 pence.

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