Australian Stock Market Report – Midday 5/16/14

MID-SESSION REPORT
(12.10pm AEST)

The worst trading session in five weeks on Wall Street overnight has given the local sharemarket a negative lead this morning. The All Ordinaries Index (XAO) is down 0.5 per cent, with only the defensive utilities managing to remain modestly firmer.

Signs that the U.S. jobs market is improving wasn't enough to lift American equity markets overnight with the S&P500 falling by 0.94 per cent (S&P500 is a measure of performance of America's 500 largest listed businesses). There were some positive signs for the U.S. jobs market however, with the number of Americans applying for unemployment benefits hitting a seven-year low.

Weaker commodity prices last night, including oil, gold and most base metals are dragging our miners lower. Nickel slumped by 6.4 per cent and continues to eat away at the 40 per cent surge in prices recorded so far this year. BHP is down slightly, Rio Tinto (RIO) is down 0.6 per cent and Australia's third biggest iron ore producer Fortescue Metals (FMG) is 0.85 per cent lower.

The major banks are down by as much as 0.9 per cent and are the most significant drags on trade at lunch. The big four banks are now all trading ex-dividend are remaining strong considering. This means purchasing shares in any of the majors today onwards will not make you eligible for their next dividend payments. Commonwealth Bank (CBA) paid out its interim dividend to investors on 3 April, while Westpac (WBC), ANZ and National Bank (NAB) pay theirs out in July. Financial services firm IOOF (Independent Order of Odd Fellows) is up 2.8 per cent off the back of news it is seeking to take control of wealth manager, SFG Australia (SFW). SFW is up 18.5 per cent thanks to the $624 million deal to create Australia's third biggest wealth manager.

Telstra (TLS) is modestly lower; however is close to cracking through a nine-year high.

One of Australia's largest and most well-known food companies, Goodman Fielder (GFF) has received a sweetened $0.70 per share or $1.3 billion takeover offer by two firms. The offer comes from Singaporean based investment company Wilmar International together with Hong Kong based First Pacific Company. GFF is the owner of brands such MeadowLea, Vogel's and Helga's.

At lunch, 637.7 million shares have been traded worth $1.26 billion. 288 stocks are higher, 465 are lower and 290 are unchanged.

The Australian dollar buys US93.5c, not far off the week's low of US93.3c and a way off this Wednesday's US94.1c high.

Tonight in the US, housing data and the results of a consumer confidence survey will both be released.