Australian Stock Market Report - Midday 3/5/2012

LUNCHTIME REPORT
(12.40pm AEDT)

The Australian share market has started the trading week in the red, following a lacklustre offshore lead and a report showing company operating profits fell 6.5pct in the fourth quarter, below estimates. At lunchtime in the East, the All Ordinaries Index (XAO) is down 14pts or 0.3pct to 4350.1.

Mining stocks are doing most of the damage in response to weaker metals trade in London on Friday night. Both BHP Billiton (BHP) and Rio Tinto (RIO) shares slumped by almost 1pct on the London exchange at the end of last week and are falling by a similar amount here. BHP is trading down 1pct to $35.33 while RIO is off 1.5pct to $69.96.

After a generally positive start financial stocks are also under pressure, with the sector lower by 0.3pct.

Utility, info tech and health care stocks are all holding up well with shares in Cochlear (COH) firmer by 0.9pct to $59.05.

The "autumn avalanche" of data is upon us this week, with reporting season officially over. The monthly inflation gauge released today shows inflation is not a concern in Australia at present, while job advertisements rose 3.3pct in February. Tomorrow the Reserve Bank of Australia is tipped to leave the official cash rate on hold at 4.25pct, while on Wednesday economic growth figures are released. February employment data comes out on Thursday, tipped to show unemployment remains at levels near 5.1-5.2pct.

At lunchtime in the East, the Australian dollar is buying US107.28c, €0.6778 and £81.22c.

Juliette Saly, CommSec Market Analyst

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