Australian Stock Market Report

Lunchtime REPORT
(12.30pm AEST)

Yesterday the Australian share market kicked off the session a little higher for the third time this week, only to start losing ground following some disappointing economic data out from China. The latest HSBC Flash Manufacturing PMI came in at 48.7 down from 49.3 points the month before. By the close of trade the All Ordinaries Index (XAO) fell 12 points to 4,106 points.

Overnight more weak European economic data worked to push markets higher on expectation that more bad news and weak data could lead to more stimulus and lower rates in Europe.

In the US durable goods orders increased by 0.2% in the last month, but this was below what the market was looking for and the index's traded lower for most of the day. In the last hour of trade the DOW Industrials index regained ground and closed higher. While the tech heavy NASDAQ was hit by falls in Cisco, Oracle, Apple and Google.

Today our market opened slightly higher up 8 points, as mining and energy stocks rallied. But by lunch time the All Ordinaries Index (XAO) had fallen back by 26 points to 4,079 points as big name banks and mining stocks gave away early gains and energy players moved into the red.

Metal prices on the London Metals Exchange (LME) were stronger overnight. S&P/ASX 200 Materials sector was off 0.4%. Our big name miners; Rio Tinto Limited's (RIO) lost 0.47% to $56.10 as BHP Billiton Limited (BHP) also down 0.84% to $31.72, while Fortescue Metals Group (FMG) lost momentum as the day went on at lunch the share price was off 2.57% to $4.36.

Metal recycler, Sims Metal Management Limited (SGM) today warned the market that its full year 2012 earnings could fall by as much at 15% because of "global economic challenges and headwinds". The company has seen a fall in available scrap metal in the US and lower sales. Sims share price touched 2 year lows before rebounding, but still down 6.45% to $11.46.

Medium sized iron ore and metal player, Sundance Resources Limited (SDL) gave back 1.2% to $0.41 and OneSteel Limited (OST) lost over 3.2% while BlueScope Steel Limited (BSL) regained some lost ground adding 1.5% to $0.33.

Oil prices move higher overnight as talks between Iran and the West on Tehran´s nuclear program ended with no agreement or plans, with another round of talks is scheduled for June. The US oil price lifted by US$0.76 to US$99.66 a barrel. In Asian trade the US oil prices rebounded to US$90.80 a barrel. S&P/ASX 200 Energy sector off 0.78% as Woodside Petroleum Limited (WPL) off 1% to $30.80 and Origin Energy Limited (ORG) continued to trade higher a day after receiving funding, of US$8.5 billion, for its joint venture Australia Pacific LNG project in Queensland. Origin's share price lifted by 0.7% at $13.01 and Oil Search Limited (OSH) continued to fall off 1.76% to $6.68.

The US gold price also moved higher again last night and in Asian trade was holding at $1,558 an ounce, with Newcrest Mining Limited (NCM) adding 0.3% to $24.98, while St Barbara Limited (SBM) added 2.1% to $1.94 and Kingsgate Consolidated Limited (KCN) added 1% to $5.01.

AGL Energy Limited (AGK) still in a trading halt after advising the market yesterday of its share offer to help fund its purchase of the remaining stake - 67.5% of, the coal-fired power station the Loy Yang power plant in Victoria that it currently doesn't own. The shares will remain in "Trading Halt State" until the commencement of normal trading on Tuesday, 29 May. AGL energy last traded at $14.93 a share. While in the utilities sector, SP AusNet (SPN) added over 1.5% and Spark Infrastructure Group (SKI) regained 1.7%.

Department store owner, David Jones Limited (DJS) saw its share price rally over 3% in early trade on rumours of a takeover bid for the company from a private equity firm hit the markets. We feel this is just rumour for rumour sake but the share price did get a boost, at lunch DJS's was up 3.4% to $2.27. While rival, Myer Holdings Limited (MYR) today held back off another 1.25% to $19.7 and food and beverage retails also lower. Woolworths Limited's (WOW) shares off by 1% to $26.63 and Wesfarmers Limited (WES) the owner of Coles, Kmart and Target down by 1.65% to 29.17.

Qantas Airways (QAN) fell another 0.68% to $1.46, Virgin Australia Holdings Limited (VAH) flat at $0.41.5 a share, while Sydney Airport (SYD), moved higher, up 0.36% to $2.81.

The banking sector, the S&P/ASX 200 Financials sector turned lower off 0.45% in early trade. The big 4 banks all weaker while the insurers held up. National Australia Bank Limited (NAB) off 0.6% to $23.33, Commonwealth Bank of Australia (CBA) off 1% to $48.77 and Macquarie Group Limited (MQG) was higher up 0.8% to $25.91. AMP Limited (AMP), one of the better performers on the market this morning up 0.78% to $3.86.

Elsewhere, Telstra Corporation Limited (TLS) was higher in morning trade, up 0.28% to $3.54; Telstra was the highest trade large cap stocks in morning trade with over 40 thousand shares changing hands.

The Australian dollar (AUD) was still below parity with the US dollar. The Aussie has traded sideways in the last 24 hours with the Aussie now worth US$ 0.9745 but slightly lower against the Euro now at €77.75 cents.

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