Australian Stock Market Report – Midday 5/4/2012

Lunchtime REPORT
(12.30pm AEST)

The Australian share market lost ground yesterday, with the All Ordinaries Index (XAO) easing by 10.3 points to 4,494 points.

Overnight the markets continued to lose ground as European investors came to terms with the fact that the European central bank left interest rates unchanged, for the sixth month in a row, and did not mention plans to cut in the future. US markets also lower after weaker than expected read on the service sector in April, the headline index dropping to 53.5 from 56.0, the lowest level this year.

At the open of trade the Aussie market fell into the red off 20 points, with weakness mining related stocks. By lunchtime the All Ordinaries Index (XAO) was still down 25 points to 4,469 points with the energy, materials and industrial sectors all down over 1 pct. The falls overnight on commodity markets have taken its toll on our markets today. S&P/ASX 200 Energy sector fell 1.9 pct. after global oil prices slumped overnight, the US oil price now holding at US$102.65 a barrel. Woodside Petroleum Limited (WPL) off 1.9 pct. to $35.50. Other energy stocks also lower; Santos Limited (STO) fell 3.2 pct. or $13.65. and Origin Energy Limited (ORG) down 1.97 pct. to $13.41.

The mining sector traded mostly lower, with BHP Billiton Limited (BHP) down 0.9 pct. to $35.92. Rio Tinto Limited (RIO) slightly higher down 1.69 pct. to $ 65.54 and our largest listed gold miner Newcrest Mining limited (NCM) off another 3.04 pct. to 425.86, after gold fell by US$16 an ounce overnight, now at US$ $1,637 an ounce.

The stock market still waiting on news from leading banks on rate changes, after the Reserve Bank of Australia's (RBA) rate cut earlier in the week. At Westpac Banking Corporation (WBC) half year briefing yesterday CEO Gail Kelly said that WBC would announce its rates decision today, but so far we have not heard from the bank. The WBC share price rose 0.35 pct. to$ 23.00. Yesterday, Commonwealth Bank of Australia (CBA) said it will lower its standard variable interest rate by 40 basis points. The standard variable rate will drop to 7.01 pct. effective from the 11th of May. The CBA share price today fell 0.25 pct. in morning trade while National Australia Bank Limited (NAB) share price climbed 0.16 pct. to $25.24. ANZ Banking Group (ANZ) share price fell 0.14 pct. to $23.53. QBE Insurance Group Limited (QBE) has given back yesterday's gains off 3.01 pct. to $ 13.53 and ASX Limited (ASX) down 0.01 pct. to $31.46.

Retailer helped the market limit the losses today, with the S&P/ASX 200 Consumer Discretionary sector up 0.02 pct. Woolworths Limited (WOW) 0.45 pct. to $26.97. Wesfarmers Limited (WES) up 0.75 pct. to $30.80. Harvey Norman Holdings Limited (HVN) share price was hit again this morning off another 1.47 pct. $2.01 after yesterday's weak quarterly result. Discount retailer, JB Hi-Fi (JBH) turned higher after a few negative sessions up 0.98 pct. to $9.49. David Jones Limited (DJS) also higher up 0.6 pct. to $2.53 while rival Myer Holdings Limited (MYR) fell 0.41 pct.

Once again airlines stocks in the news today, Qantas (QAN) announced it will cut its capital expenditure (CAPEX) by a further $400 million for the next financial year by delaying its planned delivery of new A380 planes. Qantas has confirmed it will defend its 65 pct. share of the domestic market by increasing domestic capacity. The Qantas share price was off 0.15 pct. at $1.62 and Virgin Australia Holdings Limited (VAH) shares flat at $0.41. Sydney Airport (SYD) share price was also lower, off 0.85 pct. to $2.91.

In the Telecommunication Services sector, Telstra Corporation Limited (TLS) turned higher, up 0.4 pct. to $3.60. Singapore Telecommunications Limited's (SGT) share price up 0.8 pct. to $2.45 after telling the market it will restructure its Australian based Optus business earlier in the week. Hutchison Telecommunications Australia Limited (HTA) added another 2.38 pct.

Consolidated Media Holdings Limited (CMJ) shares fell over 1.5 pct. to $3.25 on the news that Chairman Mr James Douglas Packer said that CMJ was not interested in selling his 25 pct. stake in Foxtel.

The Australian dollar (AUD) continued to lose ground against the greenback over night, but has stabilised in morning trade and buys US102.74 cents. The AUD is currently trading at and €78.07 cents.

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