Australian Stock Market Report - Midday 2/6/2012

MIDDAY REPORT
(12.30pm AEDT)

The Australian share market has kick started the trading week on a very strong note, on the back of impressive US and European data. The US unemployment rate fell to a three year low of 8.3pct in January, while European manufacturing data allayed recession fears somewhat. The US Dow Jones Index is now trading at its highest level since May 2008, while European shares posted their biggest one day gain on Friday since late December.

At lunchtime in the East, the All Ordinaries Index (XAO) is up 48.6pts or 1.1pct to 4368.7.

Gains are being made across the board with shares in the National Australia Bank (NAB) up 1.8pct to $24.18 and Rio Tinto (RIO) firmer by 2.3pct to $72.14. Rio Tinto is one of the companies releasing earnings this week, along with BHP Billiton (BHP) and Telstra (TLS).

Shares in Downer EDI (DOW) have jumped to a six month high, up 8pct to $3.82 after NSW government reached an agreement to restructure the financing of Reliance Rail, of which Downer has a 49pct stake.

The Australian dollar remains well supported, although has come off slightly due to weaker than expected retail sales. Retail trade fell 0.1pct in the last month of 2011, below expectations. At 12.45pm AEDT the Aussie is buying US107.37c, £0.6794 and €81.87c.

Juliette Saly, CommSec Market Analyst

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