Australian Stock Market Report – Midday 5/17/13

MID-SESSION REPORT

(12.30pm AEST)

Finally, after two straight days of losses the Aussie market is creeping higher. The All Ordinaries Index (XAO) is up 0.2 per cent or 8.8pts to 5,153.3. The gains are being recorded despite weakness in US markets, which slipped by 0.3 per cent however are still around all-time highs.

The mining sector is receiving a much needed boost, rising by 0.9 per cent after a tough week. BHP Billiton (BHP) is up 1.98 per cent or 67 cents to $34.43 while Rio Tinto (RIO) is edging higher by a more modest 0.44 per cent. Each US1c move in our Australian dollar results (on average) to about $100m in net profit for the country's second biggest company (behind just Commonwealth Bank).

The banks are mostly higher, with ANZ Banking Group (ANZ) up 1.37 per cent, Commonwealth Bank (CBA) up 0.66 per cent, National Bank (NAB) up 0.24 per cent while Westpac (WBC) is a touch weaker.

Virgin Australia (VBA) was one of the worst performers on Thursday following a profit warning, however is higher today. VBA is up 6.58 per cent after having its worst day in five years yesterday.

Weaker gold prices continue to hurt our gold producers, with Newcrest Mining (NCM) down 2.4 per cent or 36 cents to $14.67. NCM is down by almost 35 per cent since January 2013. The weaker Australian dollar is generally good news for our exporters; however the gold producers have been falling even further than the pullback in the precious metal in recent years.

Wesfarmers (WES), the owner of Coles supermarkets and Target issued an earnings downgrade today. It has predicted lower profit for its Target stores this financial year. WES is down by 3.17 per cent today however has improved by 16.2 per cent since January.
Worley Parsons (WOR) has cut its full-year guidance and now expects net profit after tax of between $320 million and $340 million. The services provider to the mining sector is down 10.6 per cent at lunch.
No major economic news is scheduled for release in Australia today.

Across the region, markets in South Korea and Hong Kong are closed due to holidays (Buddha's birthday).
The Australian dollar buys just US97.6 cents, a full US6c lower against the greenback than at the start of May and US8c weaker than in mid-April. Comments from the Chinese Premier and a Federal Reserve official last week has been keeping the Australian dollar under pressure.

At lunch, 762 million shares have been traded, worth $2.17 billion. 386 stocks are higher, 383 are in the red and 304 are unchanged.

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