Australian Stock Market Report

LUNCH TIME REPORT (12.30pm AEST)

The Australian market reversed yesterday's losses at the open of trade this morning. At lunchtime in the East, the All Ordinaries Index (XAO) has added 49pts to 4,418 points.

Last night, both the European and American markets rallied higher after interest and pricing of Spanish bonds improved, along with news the International Monetary Funds (IMF) had boosted its growth forecasts for 2012 and good results posted by major U.S. companies.

The market listed nice gains across the board in morning trade, with the biggest gains in the mining and Information Technology sectors.

The mining sector was again in focus, the S&P/ASX 200 Materials index was up 1.7 pct, after BHP Billiton Limited (BHP) issued its March quarter (January to March) production and exploration report this morning. The report once again showed that cyclone activity in the March quarter in Australia had hampered iron ore and coal production in the WA's Pilbara region and in Queensland. BHP reported a fall in quarterly production of iron ore and coking coal. Coking coal output, the coal used in steel production, was down 14 pct. in the last quarter as production was hit by poor weather and industrial disputes, which will be ongoing in the next quarter. The BHP report which showed good performance in its petroleum business even with output falling slightly in the quarter. BHP share price was higher up 1.64 pct. to $34.70.

Yesterday, late in trade, Rio Tinto Limited (RIO) released its quarterly production report .The company increased production of key commodities such as coal and iron over the past 12 months but production fall over the last quarter. RIO shares were down by almost 0.5 pct. by close of business yesterday but today have regrouped and added 2.35 pct. to $66.20 by lunch. Rumours are still circulating 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. Both Rio Tinto and BHP would not comment directly on this rumour but both firms did mentioned they are still looking at reviewing the future or these businesses and other none core assets. Fortescue Metals Group (FMG) up 1.6 pct. to $5.88, ahead of its quarterly production result due out tomorrow.

By lunch time the S&P/ASX 200 Energy sector was up by 1.2 pct. Big name energy firms regained ground in early trade with Santos Limited (STO) up 1 pct. to $14.05 and Woodside Petroleum Limited (WPL) up 1.7pct. while Oil Search Limited (OSH) added $0.06cents to $6.96.

The S&P/ASX 200 Financials sector moved higher up 1.15 pct. Of the four major banks National Australia Bank Limited (NAB) was the best performer in morning trade up 1.3 pct. to $25.19. Bank of Queensland (BOQ) announced its first half results today there was nothing new in the numbers that were published as BOQ had already released the financial details ahead of time, on 26th of March, when it had announced its $450million capital raising. Today BOQ republished the fact it had listed a fall has posted a $90.6 million loss in the first half of the year largely due to the cost of bad loans as customers were hit by floods and other disasters over the last year. BOQ shares up 2.4 pct. to $7.13. Queensland based insurer Suncorp Group Limited (SUN) also higher and ANZ Banking Group (ANZ) managed to rise 1 pct.
Global shopping centre operator Westfield Group (WDC) today announced it had sold off eight of its shopping centres in the US for $1.11billion allowing the company to pay down debt and invest in new developments, with some of the funds going toward the rebuilding of the new World Trade Centre in New York. WDC share prices added 1.86 pct. to $9.03.

In the medical sector today, CSL Limited (CSL) the blood and plasma maker share price lost 0.5pct. to trade at $36.82 while Mesoblast Limited (MSB) added another 2.6 pct.

Elsewhere Telstra Corporation Limited (TLS) share price was worth $3.38 and Qantas Airways Limited (QAN) higher by 0.9 pct. to $1.65.

No major economic data was released today.

The Australian dollar is buying US103.92c and €79.26c.

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