Australian Stock Market Report

Lunchtime REPORT
(12.45pm AEST)

Yesterday, what a day on the market, the Australian share market slumped to a 3-week low, with the All Ordinaries Index (XAO) falling 97.8 points to 4361 points, its biggest one day slide since mid-December 2011. Markets in the Asian region also finishing in the red, the Japanese Nikkei 225 index off 2.7% to 9,119 and Hang Seng index ended 2.6% lower.

Overnight, London stock and commodity markets were closed of the early May Day bank holiday. Elsewhere on European markets the night started off grime with 1 to 2% falls across the board, but half way through trade share markets rebalanced as investors looked to the future. The markets now expecting that the new French President Francois Hollande, the Socialist party leader, would push for better growth in France and less austerity (budget cuts), but the world will still turn and markets will not implode. The CAC Index in France ended 1.6% higher and the DAX in Germany also climbed out of the red. But for the Greeks the wait is still on, at present it does look like the Greek people will have to head back to the polls again in 2-weeks. The Greek market closed down 6.6% after being off as much at 8% early in the day.

On the Australian exchange this morning the markets moved higher, the trading volumes were light ahead of the outcome of the Australian Governments Federal budget tonight. We are not expecting too many surprises from tonight budget release but many larger investors will wait on the final print before trading again.

By lunchtime the All Ordinaries Index (XAO) had added 9 points to 4,371 points, we saw muted gains across the board. The best performing sectors were the telecommunications and utility sector.

Commodity prices continued to fall overnight, with the US oil price still at 12 week lows, the US oil price is now trading at US$97.73 a barrel.
S&P/ASX 200 Energy sector was up 0.46%, the sector still managed to move higher even with the continued slide in the oil prices. Woodside Petroleum Limited (WPL) off 0.06% to $34.48 as Santos Limited (STO) moved higher, up 0.15% to $13.11. Origin Energy Limited (ORG) was lower by 0.08% to $13.04 and Oil Search Limited added 0.7% to $7.17, after holding its Annual General Meeting today. The company saying "2012 is a potentially transformational year, where the company has unprecedented opportunity to underscore long term value growth from its portfolio of assets".

Coal stocks higher again today, Whitehaven Coal Limited (WHC) yesterday announced it has put in an offer to acquire the remaining shares in Coalworks Limited (CWK) that it currently doesn't own. Whitehaven's share price climbed 3.37% this morning to $4.75 and CWK shares added another 3.02% to $102.5 cents, above the current Whitehaven offer price of $1.00 a share. Gloucester Coal Limited (GCL) giving back some yesterday's gains off 1.07% to $7.42 while New Hope Corporation Limited (NHC) off 0.44%.

Our big name mining stocks were hit hard yesterday and most finished lower on overseas markets overnight. Today in light trade, the S&P/ASX 200 Materials sector has added 0.12%. Rio Tinto Limited (RIO) lifted by 0.6% to $62.37 while BHP Billiton Limited (BHP) added 0.55% to $34.75. Fortescue Metals Group Limited (FMG) gained 1.54% to $5.28. Our largest listed gold miner, Newcrest Mining Limited (NCM) was higher by 0.24% to $25.41 and Kingsgate Consolidated Limited (KCN) off slightly to $5.93, even with the gold price falling overnight to US$1,638 an ounce. The world's largest producer of zircon and other fine minerals, Iluka Resources Limited's (ILU) share price fell over 11% to $14.17 in early trade. The company announced it cuts its zircon production in the 2012 full year, from 500,000 metric tons to 430,000 tons, because of expected cutbacks global demand. Iluka will still continue to producer high grade titanium dioxide at current production rates.

The S&P/ASX 200 Financials sector was up by 0.05%, with three of the four major banks in the red by lunch in dull trade. Westpac Banking Corporation (WBC) added 0.44% to $22.82 but its rival were all in the red, Commonwealth Bank of Australia (CBA) down 0.08% to $52.02. National Australia Bank Limited (NAB) lost 1.6% to $24.72. Australia and New Zealand Banking Group Limited (ANZ) was off 0.5% to $24.55, while merchant bank Macquarie Group Limited (MQG) rebounded 1.21% to $27.69.

S&P/ASX 200 Consumer Staple sector fell into the red from the start of trade today, yesterday the sector received a long overdue boost from the better than expected Australian Bureau of Statistics retail sales result for March. But today our 2 largest food retailers Woolworths Limited (WOW) and Wesfarmers Limited (WES) were held back. Woolies still down over 0.77% at lunch to $26.39 and Wesfarmers the owner of Coles added a few cents to $30.19. While there smaller rival in the grocery space, Metcash Limited (MTS) the best of the pack up 1.75% in early trade to $4.06.

Elsewhere, Telstra Corporation Limited (TLS) added 0.84% to $3.60 and Leighton Holdings Limited (LEI) up 0.88% to $19.42 after confirming its 2012 profit guidance would be impacted by 2 of its projects the Airport Link - Brisbane (APL) and the Victorian Desalination Project (VDP). The company said "its guidance for underlying Net Profit after Tax (NPAT) for the six months to 30 June 2012 of $100-$150 million and, for the full year to 31 December 2012, of $400-$450 million' in line with market expectations.

The Australian dollar (AUD) continued to trade below US$102, and buys US$101.75 cents. The AUD is currently trading at €78.08 cents.

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