Australian Stock Market Report – Midday 5/12/14

MID-SESSION REPORT
(12.15pm AEST)

Local shares have kicked off the week on a negative footing ahead of the release of tomorrow night's much anticipated Federal Budget. The All Ordinaries Index (XAO) is down 0.4 per cent despite another record close for U.S. sharemarkets on Friday.

The mining sector is down 1.1 per cent, following continued iron ore weakness. The price of Australia's most important export is at an 18-month low and fell by 1 per cent on Friday. The smaller, less efficient miners are hurt most by falling commodity prices as they have higher breakeven costs than the majors. Gindalbie Metals (GBG) is down 5.9 per cent while Atlas Iron (AGO) is down 2.1 per cent. The largest players are certainly not immune however; with BHP down by 1.23 per cent and Rio Tinto (RIO) off 0.9 per cent.

The major banks are also in the red, with Westpac (WBC) down 0.6 per cent, Commonwealth Bank (CBA) 0.4 per cent softer and both National Bank (NAB) and ANZ modestly lower.

Fertiliser and explosives manufacturer, Incitec Pivot (IPL) is up 0.9 per cent thanks to posting a slightly better than expected half year profit result. 1H14 profit rose by 7 per cent to $115.7m. The result was boosted by a lift in productivity, lower costs and a jump in sales revenue.

Mineral exploration drilling services firm, Boart Longyear (BLY) has stabilised for now following last week's 16 per cent slide in its share price. BLY recorded a fall in revenue and profit late last week. BLY is unchanged after 2 hours of trade.

Stocks belonging to the defensive utilities and healthcare sectors are the lone improvers at lunch.

On the economic front, the results of the latest NAB business confidence index were issued this morning. Business confidence rose by 4.4pts to +5.8pts in April. A result above 0.0 indicates a level of optimism. Business conditions were a touch softer - easing from +0.6pts to +0.3pts.

At lunch, 738.6m shares have changed hands worth $1.26bn. 334 stocks are higher, 441 are in the red and 337 are unchanged. Volume remains light.

The Australian dollar buys US93.5c.

Tomorrow's Federal Budget aside, plenty of Chinese data issued tomorrow afternoon will also demand attention. China's retail spending, industrial production and investment spending will all be issued for the month of April. The data can impact the mining sector and in particular the Australian dollar tomorrow afternoon