Australian Stock Market Report – Midday 5/13/14

Mid Session Report
(12:00 AEST)

Much like Monday's session the ASX 200 started with a flourish this morning. Every sector started with gains although property stocks were the exception. The contrast with the previous session was the improved volume with well over a billion dollars in shares exchanged in the initial hour of trade.

The materials sector streaked ahead of every other group in early trade. Nickel miners have been keenly supported on the back of rising nickel prices. Nickel prices have risen to 27-month highs on supply concerns, after Vale's 40ktpa nickel operation in New Caledonia closed last week after an accidental spill. The closure of the plant adds to deficit concerns already in the nickel market after Indonesia, the world's largest nickel ore producer, implemented a mineral ore export ban in January. Additionally the nickel market is wary of tensions in The Ukraine. The conflict could lead to trade sanctions against Russia, the world's second largest producer of refined nickel. Shares in nickel miner Western Areas (WSA) were ahead by 2.8 per cent

Elsewhere, shares in explosives maker Orica (ORI) were under pressure following its results announcement which missed expectations. ORI made a net profit of $242 million in the six months to March 31, down $21 million, or 7.8 per cent, on its result for the same time last year. Earnings before interest and tax (EBIT) was down seven per cent at $402 million, while earnings before interest, tax, depreciation and amortisation (EBITDA) fell three per cent to $553 million. The slowdown in the mining sector meant the company´s overall sales revenue rose by only 1 per cent to $3.36 billion. The group announced a partly-franked interim dividend of 40 cents per share, up three per cent on the previous corresponding half year.

Gold and silver miner, PanAust (PNA), has raced ahead after announcing that it received a takeover bid from China´s Guangdong Rising Assets Management (GRAM). The $2.30 bid values PNA at approximately $AUD 1.46 billion. PanAust has rejected the GRAM price as being below the level that the board could recommend to shareholders. Notwithstanding, PNA has granted GRAM due diligence access, with the aim of securing a better offer price. A short time ago PanAust was up more than 30per cent at $2.08.

Figures released by the ABS showed a moderation in the demand for home loans over the month of March. The number of Australian home-loan approvals fell a seasonally adjusted 0.9% in March from February, according to The Bureau of Statistics. Economists had expected a fall of 1.5%. The value of loans for investment housing fell 0.8% from February, an indication that the trend of the last 12 months was abating following investor driven gains in the property market. The decline in home loans was the first decline in overall approvals this year.