Australian Stock Market Report – Midday 5/29/13

MID-SESSION REPORT

(12.30pm AEST)

The Australian sharemarket was up by 0.25 per cent in early trade, making it two straight days of gains. The improvement was short lived however, with stocks down a few points at lunch. The ASX200 Index has remained below 5000.0pts since late last week.

Markets have recently been under pressure, following comments by the US Federal Reserve last week in relation to stimulus in addition to weaker than forecast Chinese manufacturing numbers.

Last night, the US and UK markets traded for the first time this week, following public holidays on Monday. The FTSE in the UK recorded its second best daily improvement of the calendar year, while American equities rose by a more modest margin. A rise in consumer confidence and home prices were partly responsible.

Mining stocks are decisively higher, which is helping minimise the losses; however the big four banks are slumping by more than 1 per cent which is keeping the broader market in the red.

Wesfarmers, the owner of Coles, Kmart, Target and Bunnings is holding its Strategy Briefing Day today. WES is down 2.55 per cent, however is still up by around 10 per cent in 2013.

Gaming machine company, Aristocrat Leisure (ALL) is up 6.4 per cent after recording an 11 per cent rise in net profit and a higher dividend. Qantas (QAN) is up 5.74 per cent at lunch. It is expected to be increasing investment in Western Australia and has received a broker upgrade today.

On the economic front, the number of newly built properties sold in April jumped by 3.9 per cent, adding to the 4.2 per cent rise in March. However more importantly, the amount of construction work done over the March quarter (Jan-Mar) was worse than expected. Residential construction has fallen back, which would surely disappoint the Reserve Bank (RBA) considering that the cash rate is at a 53-year low. The market is factoring in a 30 per cent chance of a rate cut in June.

At lunch, 768.3 million shares have changed hands, worth $2.3 billion. 395 stocks are higher, 384 are in the red while 288 are unchanged.

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