Australian Stock Market Report

Lunchtime REPORT
(1pm AEST)

The Australian share market improved for the second straight day yesterday, with the All Ordinaries Index (XAO) up 30 points to 4,497 points. The market held up well after the bigger than expected rate cut from the Reserve Bank of Australia's (RBA), cutting the cash rate by 50 basis points to 3.75 pct.

The global markets were reasonably quiet overnight, as many markets were closed for the May Day holiday and the "Occupy Wall Street" May Day protests keep some traders home in the US.

The Australian market tipped higher at the open of trade helped by better than expected commodity prices and a positive close on Wall Street.
But the financial sector was under a cloud after Australia and New Zealand Banking Group Limited's (ANZ) half year profit release and the S&P/ASX 200 Utilities sector off 2.2 pct. as investors sold out of gas and oil supplier/retailers and brought into gas and oil producers.

By lunch time the All Ordinaries Index (XAO) was up 3 points to 4,500 points. The early gains were mainly found in the healthcare, energy and material sectors. With the best performer being the S&P/ASX 200 HealthCare sector up 1.45 pct, helped by the slide in the Australian dollar and demand for defensive stocks. The sector pushed higher by blood and plasma maker, CSL Limited (CSL) up 2.36 pct. to $38.21 and Mesoblast Limited (MSB) adding another 2.27 pct. to $7.67 and bionic ear maker, Cochlear Limited (COH) up 1.9 pct. to $66.08.

The energy sector also doing well, with the S&P/ASX 200 Energy index up 0.4 pct, as higher US oil prices boosted demand for energy exploration stocks. The US oil price hit US$106.12 a barrel overnight, a 5 week high. Australia's second largest oil and gas producer, Woodside Petroleum (WPL) continued to move higher today after announcing its $2 billion deal to sell a 14.7 pct. stake in its Browse LNG project yesterday. WPL held its Annual General Meeting (AGM) today and so far the view has been very positive, the company has not released any new forecast of guidance but did say new acquisition are not of the cards but "any additions to our portfolio will be screened through a very disciplined process. We will focus only on high-value opportunities and building from our core strengths." Woodside said it is training workers to support its new businesses but feels there is a need for more skilled migrants to meet labour demands and skill-sets. WPL share price rallied 0.75 pct. to $36.47.
Other energy stocks were mixed; Santos Limited (STO) up 0.29% to $14.07 and Origin Energy Limited (ORG) up 1.187 pct. to $13.67.

The mining sector traded mostly higher, with BHP Billiton Limited (BHP) the biggest winner, up 0.5 pct. to $36.15. Rio Tinto Limited (RIO) slightly higher up 0.3 pct. to $ 65.99 and our largest listed gold miner Newcrest Mining limited (NCM) adding 0.2 pct. to $ 26.47.

APN News & Media Limited (APN) held its annual meetings today, the company did say its first-half net profit was set to fall and it is running a strategic review over its New Zealand media properties, APN share prices was flat at $0.83.5 cents.

Overnight the U.K. parliamentary committee brought down its findings over the illicit voicemail interception by News Corp.´s (NWS) that lead to the closure of the News of the World tabloid. The committee found Chief Executive Rupert Murdoch is ´´not a fit person to exercise the stewardship of a major international company´´ as part of the findings. News Corp's share price did not fall in US trade and in morning trade in Australia the share price rose 1.36pct. to $19.40.

The big four banks lost ground, with ANZ Banking Group (ANZ) off 0.83 pct. to $23.79 after the bank reported a record first-half profit of 2.92 billion. In the result ANZ told the market that its margins in its Australian business fell because of higher funding costs and low demand for loans. Westpac (WBC) share price was lower off 0.61 pct. to $22.69. National Australia Bank (NAB) was the best of a negative bunch easing by 0.08 pct. Commonwealth Bank (CBA) lost 0.4 pct. to $52.60 and Suncorp Group Limited (SUN) falling 0.90 pct. to $8.21.

Elsewhere Qantas (QAN) was off 0.76 pct. to $1.64. Singapore Telecommunications Limited (SGT) up over 1 pct. after telling the market it will restructure its Australian based Optus business that will lead it the company cutting 750 jobs with most of these job losses to be in its Sydney offices and the rest in Queensland, the ACT, South Australia and Victoria.
Optus said in its statement it is looking to "creating a more efficient organisation with a renewed focus on the customer, we will be able to compete more effectively.´´ Telstra Corporation Limited (TLS) lower off 0.14 pct. to $3.57.

The Australian dollar (AUD) is buying US103.41 cents and €78.23 cents.

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