Australian Stock Market Report – Midday 5/24/2012

Lunchtime REPORT
(12.30pm AEST)

Yesterday the Australian share market lost ground for the first time this week, with the All Ordinaries Index (XAO) down 54.7 points to 4,118 point. Last night Key European index's lost 2-3% after discussions at the European Leaders summit in Brussels made no real headway to resolving the current Eurozone, especially Greek, problems. US markets and commodity prices sold off dramatically at the start of US trade but by the close the major index's had made back most of the early losses. At the close the DOW Industrials Index closed only slightly lower while the NASDAQ closed higher by 11 points.

Today our market opened slightly higher but as trading continued the market came back to hold just out of the red for most of the morning session. Key insurance and coal and iron ore miners gained while Telstra Corporation Limited (TLS) pulled the telecommunication sector lower, energy stocks higher, even with the fall in the US oil price overnight, and airlines continued to lose more ground.

By lunch time the All Ordinaries Index (XAO) held on to a 1 point gain at 4,120 points, as the market awaits the outcome of HSBC's May Flash purchasing managers Index (PMI) due out in the next few minutes.

Metal prices on the London Metals Exchange (LME) fell dramatically with copper touching a new 4 month low, but today our leading miners are higher in early trade. Big name miners; Rio Tinto Limited's (RIO) added 0.09% to $56.33 as BHP Billiton Limited (BHP) also gained 0.7% to $32.16, and Fortescue Metals Group (FMG) lifted by 0.22% to $4.57. Medium sized iron ore player, Sundance Resources Limited (SDL) added 5.6% to $0.42 and OneSteel Limited (OST) added 3.6% while BlueScope Steel Limited (BSL) continued to fall over 2.2% to $0.32.

In Asian trade the US oil prices rebounded to US$90.80 a barrel after falling below US$90 a barrel overnight for the first time since October last year. Woodside Petroleum Limited (WPL) up 0.7% to $31.13 and Origin Energy Limited (ORG) turned higher in early trade after news that one of Australia's largest gas projects had secured project finance of US$8.5 billion. The joint venture project, Australia Pacific LNG´s, now has funding for the development of its coal seam gas (CSG) project in Queensland. Origins share price lifted by 1.6% at $13.02 and Oil Search Limited (OST) off 0.7% to $6.78.

The competition watchdog, the ACCC, has given the go ahead for AGL Energy Limited (AGK) to buy, the remaining portion - 67.5% of, the coal-fired power station the Loy Yang power plant in Victoria. AGL is looking to raise a $900 million through a share issue to help fund the deal that prices the share issue at $11.60 a share. AGL's shares are in a trading halt and unless ASX decides otherwise, the shares will remain in "Trading Halt State" until the commencement of normal trading on Tuesday, 29 May. Also in the sector, SP AusNet (SPN) fell over 3% and Spark Infrastructure Group (SKI) now off 0.17%.

The US gold price also moved higher in Asian trade up US$14 to $1,562 an ounce, with Newcrest Mining Limited (NCM) adding 0.8% to $24.94, while Western Australian based gold miner, Regis Resources Limited (RRL) slightly higher up 0.2% to $3.88.
Brambles Limited (BXB) news out yesterday that its Recall information management business sale had been delayed hit the share price yesterday and in morning trade Brambles share prices came off another 1% to $6.77.

Department store owner, Myer Holdings Limited (MYR) today held its investor day, just one day out from its quarterly update and earnings downgrade. Myers share price regained a little of yesterday's lost ground up 0.5% to $ 2.01. Rival department store owner David Jones Limited (DJS) added 1 % to $2.20 while food and beverage retails held steady. Woolworths Limited (WOW) slightly higher up 0.75% to $26.93 and Wesfarmers Limited (WES) the owner of Coles, Kmart and Target up by 0.03% to 29.73.
Qantas Airways (QAN) fell another 1.7% to $1.44, Virgin Australia Holdings Limited (VAH) at $0.41.5 a share, while Sydney Airport (SYD), moved higher, up 0.18% to $2.82.5.

The banking sector, the S&P/ASX 200 Financials sector turned lower off 0.15% in early trade. National Australia Bank Limited (NAB) off 0.8% to $23.50, Macquarie Group Limited (MQG) was higher up 0.46% to $26.10.

Elsewhere, Telstra Corporation Limited (TLS) lower in morning trade off 0.8% to $3.53.

The Australian dollar (AUD) was still below parity with the US dollar. The Aussie lost more ground overnight falling to US$ 0.9690 before rebounding and now holding at US$ 0.9764, the Aussie also lower against the Euro now at €77.63 cents.

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