Australian Stock Market Report

Lunchtime REPORT
(12.30pm AEST)

Yesterday was another down day for the Australian share market, with widespread selling in all sectors apart from the utilities, the All Ordinaries Index (XAO) ended off 101 points to 4,214 points.

Overnight the European markets finished slightly lower, as Greek political concerns and news that the Greeks will be heading back to the polls on the 17th June was confirmed overnight. More concerns about the stability of the Greek banking system rocked markets after news that Greek banks has seen the European central Bank (ECB) cut access to funds and the president of the ECB, Mario Draghi, admitting it is possible that Greece could exit the euro.

The US markets held up well more most of the day, thanks to better than expected factory output, industrial production numbers, and housing data. But in the last 2 hours of trade were hit by the ECB loan news and news that the minutes of the April Federal reserve meeting, the US central Bank, showed several members feel that the economy is in need of more stimulus rattled markets.

The Australian stock exchange´s leading index, the All Ordinaries Index (XAO), lifted 17 points at the open of trade. Even with large slides in commodity prices and overseas index's over the last 24 hours, our material and energy sectors started to regain lost ground.

Our market was initially boosted by the news that the Japanese economy, expanded at a faster pace than expected up 1% over the first quarter of 2012 and on an annual basis the economy grow at 4%. Japan is Australia's 2nd largest 2 way trading partner, accounting for 12.3% of all goods and services. Today's result surprised the market as Japan still in recovery from its natural and nuclear disasters in 2011.

By lunch time the markets had turned into the red and All Ordinaries Index (XAO) had lost 21 points or 0.5% to 4,193 points.

Commodity prices continued to slide in overnight trade, in early Asian trade the US dollar oil price made back a little ground to US$93.20 a barrel. Our big name miners were mixed, with Woodside Petroleum Limited (WPL) gave back $0.05 or 0.16% to $31.67 and Origin Energy Limited (ORG) flat at $12.93 and Oil Search Limited (OST) up over 1.1% to $6.79. Coal and uranium stocks also listing small gains in early trade with Paladin Energy Limited (PDN) adding 3.4% and Whitehaven Coal Limited (WHC) up 0.9% to $4.34.

The gold price also moved slightly higher after hitting a 10 month low overnight, in electronic trade, it hit US$1,549 an ounce, Newcrest Mining Limited (NCM) added 1.3% to $24.14, while Western Australian based gold miner, Regis Resources Limited (RRL) increased by 5.8% to $3.59 and AngloGold Ashanti Limited (AGG) up 3.1% to $6.32.

Base metals on the London Metals Exchange (LME) closed lower, but that did not stop the S&P/ASX 200 Materials sector from recovering by 0.64% by lunchtime. Rio Tinto Limited's (RIO) share price gained 3.4% to $58.19. The world's biggest miner, BHP Billiton Limited (BHP) was higher by 0.65% to $32.70 and Fortescue Metals Group (FMG) made back 1.24% of yesterday's losses to $4.90.

Building materials and aluminium supplier, CSR Limited (CSR) released its 2012 full year results to the end of March 2012 yesterday and today the shares continued to lose ground. CSR shares traded lower as the morning moved on to hit $1.64 off 1.2%.

Today Adelaide Brighton (ABC) supplier of cement and lime to the construction industry, held its Annual General Meeting (AGM). Adelaide management reconfirmed its plans to investment in integrated concrete and aggregates (building soils and rock materials) operations and continue to grow its lime business. Adelaide also said it expects the carbon tax to impact its 2012 Net Profit after Tax (NPAT) by $2.7 million before mitigation. ABC's share price fell 0.34% to $2.90.

The banking sector, the S&P/ASX 200 Financials sector was once again lower down over 1.25% in early trade. Commonwealth Bank of Australia (CBA) today released its quarterly banking update. The banks "unaudited" numbers were slightly below market expectations with a Statutory Net Profit (NP) of $1.7 billion. Also reporting a 3% rise in cash profit over the quarter. Chief executive (CEO) Ian Narev said " the outlook for financial markets remains uncertain and the bank is continuing to tighten its costs and focus on sourcing local, more secure funding.CBA´s share price fell 2.18% to $50.66. Westpac Banking Corporation (WBC), off 2.2% to $21.18. National Australia Bank Limited's (NAB) down near 1% to $24.41. Australia and New Zealand Banking Group Limited (ANZ) was off 1.2% to $21.35. Key insurers and regional banks also lost ground with QBE Insurance Group Limited (QBE) off by 0.6% to $12.95.

Industrial stocks were still in focus as the lower US oil price and the recent slide in the Australian dollar help to improve prospects for many of the transport and service firms. Toll Holdings Limited (TOL) lost more ground in early trade today after it cut its expected earnings outlook yesterday. Toll shares were the most highly traded shares on the XAO yesterday and today trading volumes are still strong with TOLL's share price falling another 7.29% to $4.38. While Asciano Limited (AIO) fell another 0.4% to $4.55 and Qantas Airways Limited (QAN) unchanged and Virgin Australia Holdings Limited (VAH) off 0.6%.

Elsewhere, The Westfield Group's (WDC) share price fell by another 0.33% to $9.19. Telstra Corporation Limited (TLS) gave back ground this morning falling 1.38% to $3.58, while Energy retailer AGL Energy Limited (AGK) lost 0.4% to $14.88.

The Australian dollar (AUD) was still below parity with the US dollar continuing its strong hold on the currency markets. The AUD is currently traded as low at $0.9872 overnight and from there bounced back and now has settled at US$ 0.9940, while the Aussie has gained a little against the Euro now at €78.03 cents.

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