Australian Stock Market Report – Midday 5-3-13

MID-SESSION REPORT

(12.30pm AEST)

The European Central Bank's (ECB) first rate cut in 10 months overnight is encouraging buyers on the local market for the third time this week. The All Ordinaries Index (XAO) is up 0.3 per cent, taking the gains this week to 0.76 per cent. Monthly non-farm payrolls tonight in the US will keep investors on edge for the next 10 hours. The creation of around 150,000 is now expected by the market for April.

The ECB seems prepared to cut even further from the current lows of 0.5 per cent if necessary. European unemployment sits at 12.1 per cent while inflation is under control. The number of Americans filing for unemployment benefits last week hit a five-year low overnight and has been another positive for markets.

Yield continues to be a focal point for the market, with both Westpac (WBC) and investment bank Macquarie (MQG) announcing plans for higher dividends this morning. WBC has recorded a 10 per cent jump in first half profits; around 3 per cent higher than expected. Its interim dividend has increased by 5 per cent to 86 cents per share (cps), has an ex-dividend date of 13 May and is likely to be paid to eligible shareholders in July (as it is most years). A special dividend of 10cps will be distributed on 2 July. WBC shares are up 0.3 per cent and 30 per cent this calendar year.

MQG issued a largely in-line with forecast full-year profit result. Costs and taxes were both higher, however the financial institution declared a final dividend of $A1.25 per share; a 66 per cent rise on the corresponding period last year. MQG shares are up 9.2 per cent.

Telstra (TLS) is up 0.2 per cent, making it 10 consecutive sessions without any losses on the Australian sharemarket. TLS is up 1.71 per cent so far this month.

Japanese sharemarkets are closed today for Constitutional Memorial Day.

The likelihood of a rate cut has increased to 54 per cent over the past 24 hours locally, with a drop in the number of building approvals granted to developers by councils and an ECB rate cut pushing up expectations.

At lunch, 658.1M shares have been traded, worth $2.1bn. 436 stocks are higher, 357 are in the red while 290 remain unchanged.

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