Australian Stock Market Report – Midday 3-26-13

Mid-Session Report
(12:00 AEDT)

Global markets have seen volatile trade in the last 24 hours. European stock indices rose in the early part of their session as investors celebrate the announcement of a Cypriot bailout. The celebrations were short lived. Market turned south after Eurogroup Chairman Dijsselbloem suggested that the Cypriot deal should be used as a template for future Eurozone bank "bail-ins". Previously rhetoric from officials had made the point that the Cypriot measures, particularly around depositors, were unique and a 'one off'.

The debate in the markets now turns around the possibility that depositors in weaker financial institutions throughout the Eurozone will be treated in a similar rough house fashion in the event of future bailouts.

Locally, stocks have been under pressure from the outset with losses circa 0.3%-0.5% at the open and new lows being plumbed thereafter.

The IT sector has been the only patch of green on the day owing to support for Computershare (CPU) whose shares were ahead by 0.3%

Resource stocks were the noted weak spot on the index. The sector continues to underperform driven by expectations that commodity prices will moderate in the medium term.

Retailers held some ground in early trade helped by a better than expected result from outdoor retailer Kathmandu. The result provided support for the case that retailers are gaining some margin traction after years spent discounting in an effort to attract customers.

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