Australian Stock Market Report

MIDDAY REPORT
(12pm AEDT)

With the Australian reporting season out of the way the market has fallen back in to usual trading today, following the trends from the U.S. markets and commodity prices overnight. Last night we saw the US markets close slightly higher and this has given our market a small boost at the start of trade. At lunchtime in the East, the All Ordinaries Index (XAO) is up 22pts.

Yesterday's update on the state of China's manufacturing industry pushed overseas markets higher overnight. China's official government manufacturing reading showed signs of improving conditions within the sector. The reading came in at 51.0 which was a touch higher than the 50.9 that the market was forecasting. A reading above 50.0 indicates improving conditions.

The stronger than expected Chinese manufacturing data helped push commodity prices higher overnight, base metals on the London Metals Exchange (LME) climbed, gold rebounded slightly off US$80 an ounce slide from the previous session to end US$11 an ounce higher and oil prices also climbed.

Just after the close of the U.S. markets this morning a rumour hit the press of a large oil fire at a pipeline in Saudi Arabia. The US$ oil prices spiked to US$110.55 a barrel on the news. Saudi Arabia is the world's largest oil producing nation and fear of disruption to supply is of a major concern for markets. About 10 minutes later the Saudi Government released a statement saying the claims were false and were started by the Iranian press, since then the oil price to fall back and is now at US$108.30 a barrel. Our energy stocks are still higher this morning, the S&P/ASX 200 Energy sector up 0.52%, Woodside Petroleum Limited (WPL) flat at to $36.45 and Oil Search Limited (OSH) up 2.94 pct to $7.36 a share.

All market sectors are moving higher today, with a strong showing from the S&P/ASX 200 Materials sector up 0.61%. Rio Tinto Limited's (RIO) share price is up 0.3pct in early trade to $66.47 while BHP Billiton Limited (BHP) up 0.56pct to $35.75. Fortescue Metals Group Limited (FMG) is the biggest winner this morning of the iron ore miners adding $0.10 to the value of its share price or 1.81 pct to$5.63.

The banking and finance sector is stronger with the big 4 banks and key insurers leading the way. The insurers are not at all phased by the new wave of flooding and wet weather conditions in the Eastern states. Although market commentators are expecting claim calls to rise again next week, currently Insurance Australia Group Limited's (IAG) share price is lower off 0.95 pct to $3.14, while Suncorp Group Limited (SUN) up 0.75 pct and QBE Insurance Group Limited (QBE) shares up 2 pct to $12.22.

National Australia Bank Limited (NAB) is the only one of the big 4 banks to currently be in the red off 0.64 pct to $23.43. Australia and New Zealand Banking Group Limited (ANZ) is the best of the big 4 up 1.48 pct to $22.01.

Retails stocks are mixed today, the basic food and drink retailers are continuing to climb, while discretionary retailers are still under pressure. Woolworths (WOW) yesterday reported a 16.8pct fall in first half net profit after tax to $966.9 million. WOW shares slightly higher up $0.13 to 25.43 a share. Wesfarmers owners of Coles and Bunning's stores, also slightly higher this morning, up 0.24 pct to $29.32. Harvey Norman Holdings Limited (HVN), JB Hi-Fi Limited (JBH) and David Jones Limited (DJS) all lower in early trade.

No economic data is due for release today in Australia or tonight in the states.

The Australian dollar is buying US108.11c, €80.11 and £67.73c.

Juliana Roadley, CommSec Market Analyst

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