Australian Stock Market Report – Midday 5/31/2012

LUNCHTIME REPORT
(12pm AEST)

Despite a positive start to the trading week, the Australian share market continues to be sold off today, and is on track to close out May with an 8.5pct drop. That would make it the worst month on the Australian share market since the collapse of US investment bank Lehman Brothers in September 2008. In early trade, the All Ordinaries Index (XAO) is down 47.2pts or 1.1pct to 4101.5. Following falls on European and US share markets overnight on more worries about the deepening European debt crisis.

Financial stocks are amongst the worst performers in early trade, not helped out by a 6pct drop from the National Australia Bank (NAB) as it trades without rights to its dividend. The NAB is paying shareholders a 90c per share dividend, yet is down $1.43 to $22.39 at midday in the East. Shares in Macquarie Group (MQG) are lower by 1.6pct to $26.63 while the Commonwealth Bank (CBA) is down 1.5pct to $49.

Upmarket retailer David Jones (DJS) has updated the market, saying sales continue to drop. Sales for the three months to April fell almost 3pct to $399.8 million, with DJS saying the first few weeks of this quarter look similar. Rival Myer Limited (MYR) has already forecast a drop of up to 15pct in full year profit. Shares in DJS are up 1pct to $2.27 while MYR is down 1.3pct to $1.955.

The Australian dollar continues its slide against the greenback, falling to a six month low this morning below US97c. Currently the AUD is worth US97.03c, £0.6269 and €78.44c.

Economic data out today shows a bigger than expected drop in building approvals for the month of April, down 8.74pct on the month. In the year to April, building approvals fell 24.1pct.

Meanwhile, new private capital expenditure (CAPEX) rose 6.1pct in the month of March.

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