Australian Stock Market Report – Midday 3/6/14

Mid Session Report
(12:30 AEDT)

The ASX 200 was under pressure from the outset on Thursday. At its worst levels the index was down by 24 points. It didn't take long for prices to consolidate and move off the lows of the session. The catalyst for the morning session came in the form of the better readings on trade and retail sales at 11:30 AEDT.

Shortly before the data was released the market was at a 15 point deficit. Following the figures the market was threatening a move into positive territory.

Figures from the ABS showed that retail sales rose 1.2 per cent in January following a 0.5 per cent gain in December, well ahead of the markets expectations for a 0.5 per cent rise. New South Wales drove the lift in retail sales [Kick off your trading day with our newsletter]

making up over half of the 1.2 per cent increase. There was also strong spending in Victoria and Queensland. The figures dovetailed with the solid spending outcomes seen for the households seen in the National Accounts figures earlier in the week. The encouraging take out for the RBA is that low interest rate settings continue to have a positive bearing on consumer attitudes towards spending and lending.

Retailers have been conspicuous outperformers in a falling market over the course of the morning and added to gains following the better data. A short time ago Harvey Norman (HVN) shares were at $3.20 , up 3 cents or 0.96 per cent, JB Hi FI (JBH) was at $18.96 up 50 cents or 2.7 per cent, Myer (MYR) was at $2.66 up 4 cents or 1.72 per cent.

Elsewhere, trade figures showed $1.43 billion surplus in January, hitting a 29-month high, following a revised $591 million surplus in December. Once again the figures were well above the markets forecasts for a $100 million surplus. Over the course of the month exports rose by four per cent in seasonally adjusted terms, while imports rose by one per cent.

Bank of Queensland (BOQ) has outperformed most of its peers on Thursday. An improved balance sheet has resulted in Moody´s upgrading its long-term credit rating to A3, up from Baa1. A short time ago BOQ was at $12.47up 20 cents or 1.63%.

The Aussie dollar has been one of the biggest movers in response to the better readings on trade and retail sales. The currency was trading at $US0.8980 pre data compared to $US0.9020 a short time ago.