Australian Stock Market Report – Midday 5/14/13

MIDDAY REPORT

(12pm AEST)

Australian shares are slightly firmer at lunchtime in the East, following a mixed offshore lead and ahead of the release of the Federal Budget in Canberra tonight.

The All Ordinaries Index (XAO) is firmer by 0.2 per cent.

Overnight, European markets edged from five year highs on profit taking, while US markets were mixed although better than expected retail sales data did help sentiment.

The Federal Government has indicated tonight's federal budget could post a deficit of around $12 billion. We believe the deficit could be larger, to the tune of $15-17 billion. Healthcare, infrastructure and financial services industries will be in focus.

In the early session, health care stocks are performing well on defensive buying. The sector is firmer by 1.3 per cent.

With the Australian dollar remaining below parity, companies which have a large exposure to the US market are also performing well. Pallet provider Brambles (BXB) is firmer by 2.9 per cent to $9.35 while building products supplier James Hardie (JHX) is up 1.1 per cent to $10.80.

World crude oil prices fell overnight in response to slowing oil demand out of China. Our energy sector is down 0.5 per cent in the early session.

Across the region in early trade, the Nikkei is up 0.2 per cent, the Shanghai Composite is down 0.8 per cent and the Hang Seng in Hong Kong is firmer by 0.6 per cent.

So far on the market, 714 million shares have changed hands, worth $1.9 billion. 399 are up, 393 are down and 270 are unchanged.

The Australian dollar remains below parity today, buying US99.8c. It's also worth £0.6516 and €76.66c.

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