Australian Stock Market Report

LUNCH TIME REPORT (12.30pm AEST)

The Australian share market lost ground yesterday, with the All Ordinaries Index (XAO) closing down 22 points to 4,382 points. Overnight the US markets ended mixed and European markets closed slightly higher. Concerns over Spanish debt and growth prospects and mixed economic data out of the Unitied States held back the tech heavy NASDAQ and lead to low volumes being traded out European markets.

Here at home, the Australian market opened higher, up 8 points. At lunchtime in the East, the All Ordinaries Index (XAO) has added given back a lot of ground and the index was only up by 3pts to 4,385 points.

The mining sector was in focus this morning as investors await the quarterly production report from our second largest listed miner Rio Tinto Limited (RIO). The S&P/ASX 200 Materials index was up 0.15pct. Rio share price were up 0.32 pct. or 21 cents to $65.40 while our largest miner BHP Billiton Limited (BHP) added 0.3 pct or 10 cents to $34.41. Rumour are building in the market that RIO and BHP are likely to sell off their diamond assets to New York based Private equity firm Kohlberg Kravis Roberts & Company (KKR). Reports from London's Sunday Times state that KKR is now the lead bidder from BHP´s Ekati Canadian diamond mine (valued at around $750 million) and RIO's diamond businesses that are currently worth around $10 billion.

Iron ore miner BC Iron Limited (BCI) today told the market that its Nullagine Iron Ore Joint Venture with Fortescue Metals Group (50- 50 ownership deal) was on track to reach its target production rate of 5 million tonnes per year. Listing a record 809,753 tonnes were mined over the last quarter at an average sale prices of US$124 a metric tonne. BCI share price initially moved higher but buy lunch the share price had fallen 3.1pct. to $2.81.

Mineral exploration company, Aquila Resources Limited (AQA) today update its resource estimate for the iron ore project in South Africa. The news lifted AQA share prices in early trade but by lunch the price was flat. Explosives and fertiliser firm Incitec Pivot Limited (IPL) up 3.16pct. to $3.26 while James Hardie Industries SE (JHX) share price fell over 1.5pct. to $7.55 on news of a change in management in its US division.

By lunch time the S&P/ASX 200 Energy sector was off by 0.2 pct. Big name energy firms lost ground in early trade with Santos Limited (STO) and Woodside Petroleum Limited (WPL) both off a few cents per share, while Oil Search Limited (OSH) added a few cents. News out today from the Federal Government that companies involved in the creation of renewable energy will soon be able to apply for funding from the government's $10 billion Clean Energy Finance Corporation (CEFC), which is due to start operating from July 2013.

The world´s fourth largest uranium producer Energy Resources of Australia Limited (ERA) saw its share price rose again in morning trade, up 7.5pct. After ERA's share price increased 6.5pct. yesterday on news that it is pushing ahead with plans to turn its open-pit Ranger mine, in Northern Territory, into an underground operation, the company does not yet have the approvals to do so but the news did excite investors.

The S&P/ASX 200 Financials sector moved higher up 0.27 pct. Of the four major banks National Australia Bank Limited (NAB) was the best performer in morning trade up 1 pct. to $24.87. ANZ Banking Group (ANZ) managed to rise 0.30 pct or 14 cents to $23.19. Queensland based finance and insurance firm, Suncorp Group Limited (SUN) was one of the best performers in early trade up over 0.7 pct. to $8.19.

The S&P/ASX 200 Consumer Discretionary sector today rose in early trade, up 0.6pct, helped by media and small retail stocks. David Jones Limited (DJS) lifted 1.3 pct. and Harvey Norman (HVN) up over 1.5 pct.
The food and beverage retailers were weaker with Wesfarmers Limited (WES) only $0.03 higher to $29.20 while Woolworths Limited (WOW) fell 0.47 pct. to 425.63.

In the medical sector today, CSL Limited (CSL) the blood and plasma maker share price rose over 3pct. at the open of trade and by lunch had held on to a 2pct. gain to trade at $37.01 and Mesoblast Limited (MSB) added 1.5pct.

Elsewhere Telstra Corporation Limited (TLS) share price was worth $3.37 and Qantas Airways Limited (QAN) higher by 0.3 pct. to $1.66.

In economic news, Reserve Bank of Australia (RBA) released the minutes of its last board meeting held on the 3rd of April. The minutes showed the RBA is waiting to see the outcome of more economic data, like the Australian quarterly inflation data due out next week, before it makes its next move.

The Australian dollar is buying US103.34c and €78.73c.

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