Australian Stock Market Report – Midday 5/29/14

A train hauling carriages filled with iron ore is seen on the outskirts of Port Hedland in the Pilbara region of Western Australia in this December 3, 2013 file photo. If Australian miners are worried about the dramatic decline in iron ore prices, it doesn't show. At an annual gathering of many of the world's biggest and smallest iron ore producers here the mood is upbeat - as if the heftiest one-day fall in ore prices since the global financial crisis never happened. REUTERS/David Gray/Files REUTERS/David Gray/Files

MID-SESSION REPORT
(12.10pm AEST)

The Australian sharemarket is slipping for the first time since last Monday, with the All Ordinaries Index (XAO) down 0.3 per cent. A weak lead from Wall Street overnight and softer commodity prices are both drags.

The price of iron ore slumped by 1.3 per cent to US$96.8 per tonne overnight; not too far off a two year low due to oversupply concerns. The miners are the worst performers at lunch, with the industry down 1 per cent. Australia's biggest iron ore producer and second largest miner, Rio Tinto (RIO) is down 1.8 per cent, while BHP Billiton (BHP) is 1.1 per cent weaker. Fortescue Metals (FMG) is down 2.1 per cent. Smaller producers are mixed, with Atlas Iron (AGO) down 2.98 per cent while Gindalbie (GBG) is up 4 per cent. GBG is still down 12 per cent this month.

The financials are mixed, with Commonwealth Bank (CBA) and ANZ Banking Group (ANZ) modestly firmer while both Westpac (WBC) and National Australia Bank (NAB) are both a little lower. Shopping mall owner Westfield Group (WDC) and Westfield Retail Trust (WRT) are both in trading halts as investors vote on a merger of Australian and New Zealand assets with WRT. The vote seems to currently be too close to call.

The defensive telcos are the best performers at lunch, with Australia's sixth biggest company Telstra (TLS) close to cracking through the nine-year high hit last week. TLS shares are up 0.75 per cent to $5.38. Despite a 30 per cent rise in 2012, a 20 per cent surge in 2013 and a 2.5 per cent improvement this calendar year, TLS is still yielding (returning to investors via a dividend each year) 5.3 per cent. The yield and stable profits have attracted investors.

On the economic front, quarterly business investment numbers and statistics on new home sales have both been released. The amount of money Australian businesses are investing to grow has slumped by 4.2 per cent between January and March. This was worse than expected, with spending on buildings falling by 7.5 per cent. On a positive note, expectations that the business community will invest more than previously hoped next year has been supportive for markets. The Australian dollar has jumped by US92.58c while the market has been steadily eating away at the more substantial early slump. New home sales in April rose by 2.9 per cent in April - the fourth straight monthly gain. Sales in WA and NSW were the outperformers.

At lunch, 618.8m shares have been traded worth just $1.47bn. 374 stocks are up, 373 are lower and 326 are flat.