Australian Stock Market Report - Midday 3/14/2012

LUNCHTIME REPORT
(12.20pm AEDT)

Australian stocks are once again posting solid gains, on the back of positive gains in the US and Europe overnight. Retail sales in the US came in higher than expected overnight boosting investor sentiment, while encouraging comments from the US Federal Reserve about moderate expansion in the American economy also helped. Results of the US Bank Stress tests were also revealed overnight, with only four of the 19 banks tested failing, although one of them was Citi. The overall banking sector rose around 5pct in the US overnight. At lunchtime in the East, the All Ordinaries Index (XAO) is up 39.6pts or 0.9pct to 4376.1.

All sectors are recording gains on our market, with the financial sector firming by 1pct and the materials sector up 1.3pct.

Iron ore miner Fortescue Metals Group (FMG) has announced expansion plans, seeking to raise US$1 billion through a bond offering in senior unsecured notes. FMG is planning to triple its iron ore output by the end of June 2013. In early trade, FMG shares are up 1.4pct to $5.85.

Meanwhile, online advertising firm Carsales.com (CRZ) has acquired a 15pct stake in Torpedo7 limited, the largest Australian and New Zealand based online retailer of adventure sport, fishing gear and daily product deals. The acquisition set Carsales.com back $7.2 million but is expected to help generate a lot of revenue for the company. CRZ shares are up 2.5pct to $5.30.

Economic data released today shows the decision to keep rates on hold in February and March has had an impact on our moods. Consumer sentiment fell 5pct in March to a reading of 96.1 points, which shows pessimists now outweigh the optimists. All five components of the survey fell in March, with the sub index which tracks how consumers view the state of their family finances down 8.6pct.

The Australian dollar is worth US105.35c, £0.6711 and €80.57c.

Juliette Saly, CommSec Market Analyst

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