Australian Stock Market Report – Midday 5-6-13

MID-SESSION REPORT

(12.30pm AEST)

The Australian sharemarket is higher thanks to a better than expected US jobs on Friday, however a portion of the gains were wiped out due to a weaker than forecast retail spending report. The All Ordinaries Index (XAO) is up 1.1 per cent or 54.4 pts to 5159.8. The mining sector is the standout at lunch thanks to a strong rise in commodity prices, in particular copper which jumped by 6.2 per cent.

The S&P/ASX 200 Materials index is up 2.7 per cent, with the leader of the pack, BHP Billiton (BHP) is up 2.75 per cent or 87 cents to $32.84. The smaller iron ore focused miner, Rio Tinto (RIO) is up 2.99 per cent or $1.64 while Fortescue Metals (FMG) is having its best day since 19th April and is 4.99 per cent higher. Since the start of 2013 however, the miners are down 12.8 per cent.

The major banks continue on their strong run, with Commonwealth Bank of Australia (CBA) up 1.44 per cent, while Westpac (WBC), National Australia Bank (NAB) and ANZ Banking Group (ANZ) are all at least a few cents stronger.

The monthly retail trade report has been issued by the Australian Bureau of Statistics this morning (11.30am AEST) and had a negative impact on the Australian dollar and broader market. Retail spending in March slipped by 0.4 per cent. The market was expecting a modest improvement in the numbers. Despite the monthly pullback, spending rose by around 2.5 per cent over the first two months of the year, making it the best quarter since 2007. Most economists are still expecting the Reserve Bank of Australia (RBA) to keep rates on hold tomorrow afternoon at 2.30pm (AEST), however the market is pricing in a 50/50 chance of a move.

On Friday, 165,000 jobs were added in April, making it around 20,000 more than expected. The unemployment rate eased from 7.6 per cent to 7.5 per cent and the previous two months were revised upward. The Dow Industrials cracked through 15,000 for the first time on record while the broader S&P500 index broke 1,600.

The Japanese sharemarkets will be closed today to observe the 'Children's Day' holiday. On Wednesday, monthly Chinese trade data will be issued while the latest inflation reading is out on Thursday; a subdued result is expected.

This week in Europe, investor confidence and European Central Bank (ECB) President will be delivering a speech tonight. French bank holiday on Wednesday and G7 finance ministers are going to kick off a three day meeting on Friday.

A relatively quiet data week is expected in the US. Weekly employment claims on Thursday in addition to a few speeches by Federal Reserve officials will be the highlights.

At lunch, 673.4M shares have exchanged hands, worth $1.54bn. 504 stocks are higher, 293 are lower while 318 are currently unchanged.

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