Australian Stock Market Report – Midday 4/23/2012

LUNCHTIME REPORT
(12.20pm AEST)

The Australian share market has started the trading week on a subdued note, despite gains on US and European markets late last week. At lunchtime in the East, the All Ordinaries Index (XAO) is down 11.8pts or 0.3pct to 4432.6.

Mining giant BHP Billiton (BHP) is down by 0.5pct to $35.31 despite firmer commodity prices. UK newspaper reports over the weekend suggest the mining giant is facing a $5 billion loss on shale gas deals and may have to slash the value of those assets. Today, the miner has reached an agreement to buy five exploration tenements near its Olympic Dam operation for $10 million. Rival Rio Tinto (RIO) shares are trading at $66.66, up slightly.

Financial stocks are flat, with the Commonwealth Bank (CBA) slightly firmer, up 0.1pct to $51 while the National Australia Bank (NAB) is down 0.7pct to $25.01.

Making news today, drug maker Biota (BTA) shares are trading down 7pct to $0.88 after announcing plans to merge with American NABI Biopharmaecuticals to form a combined company which will list on the NASDAQ. If approved, BTA shares will be delisted on ASX but Biota shareholders will own about 74pct of the new company.

Economic data released today shows inflation remains weak in the business community. Australia´s producer price index
fell 0.3pct in the March quarter, for an annual rise of 1.4 per cent. Economists´ forecasts had centred on a March quarter PPI rise of 0.5 per cent. Core inflation, or CPI numbers due tomorrow, should show the annual inflation rate holding around 2pct, giving the Reserve bank of Australia few reasons to delay a rate cut in May.

The Australian dollar has fallen slightly on the PPI data and at 12.20pm AEST is buying US103.36c, £0.6417 and €78.39c.

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