Australian Stock Market Report – Midday 6/26/13

MID-SESSION REPORT

(12.20pm AEST)

Local shares are finally improving decisively, with the All Ordinaries Index (XAO) up 1.6 per cent. This is largely making up for a 2 per cent slide over the previous two sessions.

Our market is largely being driven by two factors. After the market close yesterday, an official from the People's Bank of China (PBoC) calmed investor nerves somewhat about the market's liquidity concerns. This was one of the main reasons why the Shanghai Composite Index managed to stage quite a staggering recovery late in Chinese trade. Stocks in Shanghai were down by as much as 5.8 per cent, only to end just 0.2 per cent lower.

Secondly, last night the DOW rallied by 100pts. This was the best daily improvement for the US market in a week. Stronger readings of consumer confidence, new home sales and durable goods orders were the main catalysts.

The mining sector has been one of the hardest hit regions of our market this week, slumping by 4.3 per cent on Monday and Tuesday (combined). Today however, the resource stocks are leading the gains. BHP Billiton (BHP) is up 2.1 per cent, Rio Tinto (RIO) is 3.1 per cent firmer and iron ore miner Fortescue Metals (FMG) is up 2.7 per cent. RIO has reportedly halted coal transportation from its Mozambique mines due to safety concerns. Gold producer Newcrest Mining (NCM) is edging 0.11 per cent higher, but has struggled due to a weaker gold price in recent weeks. NCM is down 10 per cent in just three sessions.

The big four banks are higher by as much as 1.9 per cent, while even defensive telco, Telstra (TLS) is joining in on the fun. TLS is 2.2 per cent higher.

Surfwear retailer, Billabong (BBG) was one of the standouts on Tuesday after telling the market it is in the middle of refinancing loans and in talks to sell some of its key assets. BBG is down 3.95 per cent today, however was up 46 per cent yesterday.

At lunch, 786 million shares have changed hands, worth $1.9 billion. 549 stocks are higher, 271 are in the red and 334 are unchanged.

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