Australian Stock Market Report – Midday 3/12/14

Mid Session Report
(12:00 AEDT)

Sellers have returned to the share market on Wednesday having stayed their hand somewhat in the previous session. The themes driving sentiment remain largely the same, with the central discussion turning around the mining sector and the near term prospects for the price of iron ore. To that end, prices for the commodity have consolidated at $104.90 / tonne in the last day having suffered an 8% decline in the previous day.

Copper prices however have been a different story, falling to their lowest levels in almost four years overnight. As with iron ore, markets remain on edge about Chinese demand for copper in the medium term.

As a result the commodity related ASX sectors of Materials and Energy continued to underperform in early trade. The US Energy Information Administration (EIA) said overnight that any weather-related slowdown in US crude oil output will be made up over the next few months. As a result NYMEX light sweet crude slipped 1.5% creating headwinds for Woodside Petroleum (WPL) which was at $38.20, down 44 cents or 1.1 per cent, Oilsearch (OSH) was at $8.65, down 17 cents or a loss of 1.9 per cent. The bulk miners were lower with the exception of Fortescue Metals Group (FMG) whose shares were at $4.95 a gain of 12 cents or 2.6 per cent having fallen close to 12% over the last 2 sessions.

The difference on Wednesday has been the financials. They were the balancing item in the last session, keeping the market out of the red. However a softer reading on consumer confidence in the last month worked against the lenders in early trade today. The big four banks were lower in the order of 1 - 1.5 per cent. Consumer confidence fell to its lowest level since May last year as escalating job losses weigh on household sentiment. The Westpac-Melbourne survey dropped by 0.7 per cent in March to 99.5 points, compared with 100.2 in February. The measure has fallen 10.9 per cent from its November 2013 peak of 110.3 and is at its lowest point since May 2013. Elsewhere ABS figures showed home lending flat in January. Analysts had expected an increase of 0.5%. The value of lending to investors fell by a larger than expected 3.3 per cent over the month, having risen by rising by 40 per cent over 2013. Retailers weren't helped by the economic news of the morning. Harvey Norman (HVN) shares were at $3.27 down 9 cents or 2.8 per cent, JB HiFi (JBH) was at $18.74 down 65 cents or 3.4 per cent.