Australian Stock Market Report – Midday 4/2/2012

LUNCHTIME REPORT
(12.15pm AEST)

The local share market has started the new trading week, month and quarter on a positive note thanks to strong gains offshore on Friday night and better than expected Chinese manufacturing data. The All Ordinaries Index (XAO) hit a high of 4460.7pts in early trade but has come off that slightly at lunchtime in the East and at 12.15pm AEST is firmer by 18.1pts or 0.4pct to 4438.1.

April is technically a good month for share markets, with average monthly gains of 2pct before the age old adage "Sell in May and go away" rings true for many investors. It was a very positive start to the March quarter, with the local market adding around 7pct - the best start to a trading year since 2006. US markets posted their best start to a trading year in 14 years.

On the share market mining stocks are faring best after official data showed Chinese manufacturing rose to an 11 month high in March. Index leader BHP Billiton (BHP) shares are firmer by 2.5pct to $35.47 while the materials sector as a whole is up 1.8pct.

Financial stocks are mixed with Westpac (WBC) shares the strongest out of the big four, up 0.4pct to $21.97.

Australia's largest carrier Qantas Airways (QAN) announced over the weekend that jet fuel represents the company's largest operational cost, with prices currently at their highest level since 2007/08. As such the airline has increased fuel surcharges for the second time in eight weeks. Qantas has also received a broker downgrade today, sending its share price down 3.2pct in early trade to $1.7275.

On the economic front, house prices rose 0.2pct in March showing signs of stabilisation in the housing sector. It was a Super Saturday in Sydney on the weekend, with the capital city of New South Wales recording its best auction day since 2010.

The Australian dollar is weaker at lunchtime in the East, worth US103.93c, £0.6501 and €77.93c.

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