Australian Stock Market Report – Midday 5/18/2012

Lunchtime REPORT
(1pm AEST)

The Australian share market ended a little lower yesterday, despite a positive start to the session. The ASX 200 Index (XJO) fell 8 points to 4,157 points.

Overnight, European shares fell to five month lows on as investor concerns still mounted about the potential for a euro-zone break up. Reports of a run on deposits at the Spanish banks, especially Bankia, after news the Ratings agency Moody´s cuts the credit ratings of 16 Spanish banks. US markets also lower of weak manufacturing data out of the Philadelphia region and European market concerns.

Today the market here in Australia started lower with weakness in all areas except gold stocks. The Australian stock exchange´s leading index, The All Ordinaries Index (XAO) fell over 70 points at the open of trade. Key overseas exchanges listed large slides in commodity prices over the last 24 hours with our mining, energy and banking sectors were hit hard at the start of trade, with falls in all Asian markets.

By lunch time the markets had turned into the red and All Ordinaries Index (XAO) had lost 71 points to 4,137 points, but since the open of trade the index had fallen by over 100 points.

Commodity prices continued to slide in overnight trade, Benchmark crude oil prices fell in response to weaker-than-expected US economic data and fears of a euro-zone break up. US NYMEX crude fell by US$0.25 to US$92.56 a barrel overnight, and in early Asian trade the US$ oil price traded sideways to hold at US$93.52 a barrel. Our big name energy players were mixed, with Woodside Petroleum Limited (WPL) gave back 2.27% to $31.02 and Origin Energy Limited (ORG) down 1.1% at $12.76 and Oil Search Limited (OST) giving back over 2.6% to $6.57.

The gold price turned the corner in overnight trade after strong buying from Asian and European investors. Gold rebounded off a 10 month low earlier in the week to end up US$38 an ounce in overnight trade and now hold at US$1,575 an ounce. News out from the World Gold Council (WGC) that Chinese demand for gold hit a record in the first quarter of 2012, thanks to high demand for jewellery and gold as an investment. Newcrest Mining Limited (NCM) added 5.47% to $25.43, while Western Australian based gold miner, Regis Resources Limited (RRL) increased by 0.13% to $3.71 and St Barbara Limited (SBM) up 5.6% to $1.96. AngloGold Ashanti Limited (AGG) added another 2.2% to $6.47. But Pan Australia Limited (PNA) lower in a positive gold market after the company updated investors today on its plans to pay its first interim dividend in the second half of the year as it wraps up a two-year, A$450 million capital expenditure program. Even with the news that Pan was going to pay a dividend and was looking at greater production growth at its major mines in Laos, shares fell in morning trade to $2.72 off 1.09%.

Base metals on the London Metals Exchange (LME) closed lower, and the S&P/ASX 200 Materials sector fell dramatically in early trade off 2.13% by lunchtime. Rio Tinto Limited's (RIO) share price off 3.7% to $55.99. The world's biggest miner, BHP Billiton Limited (BHP) was lower by 2.9% to $31.82 and Fortescue Metals Group (FMG) made back 6.5% of yesterday's losses to $4.59.

The banking sector, the S&P/ASX 200 Financials sector was once again lower down over 1.92% in early trade. Commonwealth Bank of Australia's (CBA) share price fell 2.27% to $49.86. Westpac Banking Corporation (WBC), off 2.2% to $21.18. National Australia Bank Limited's (NAB) down near 2% to $23.86. Australia and New Zealand Banking Group Limited (ANZ) now off 2% to $21.14, while key insurers and regional banks continued to fall with QBE Insurance Group Limited (QBE) off by 3.1% to $12.47.

Toll Holdings Limited (TOL) lost more ground in early trade today, TOLL's share price fell another 1.13% to $4.36. While Asciano Limited (AIO) one of the better performers flat in early trade at $4.55 and Qantas Airways Limited (QAN) off 2.36% and Virgin Australia Holdings Limited (VAH) flat at $0.42

Elsewhere, Westfield Group's (WDC) share price fell by another 1% to $9.18.5. Telstra Corporation Limited (TLS) fell in morning trade off 0.28% to $3.57, while Energy retailer AGL Energy Limited (AGK) lost 0.67%.
The Australian dollar (AUD) was still below parity with the US dollar .The AUD is currently at US$ 0.9858, the Aussie also lower against the Euro now at €77.77cents.

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