Australian Stock Market Report – Midday 6/5/13

MID-SESSION REPORT

(12.30pm AEST)

The Australian market is slumping for the second time this week, with the All Ordinaries Index (XAO) down 1.00 per cent. Local shares are currently at their lowest levels since mid-January, pushed lower by a disappointing growth reading just before lunch. Comments by another Federal Reserve official overnight supporting a slowing in stimulus kept US investors on edge. Many market participants are remaining pensive ahead of the monthly non-farm payrolls out this Friday (US jobs report).

The Australian economy has expanded by just 0.6 per cent between January and March this year; significantly lower than both our expectations and consensus. A weak construction reading was enough to offset strong exports and retail spending over the March quarter. The Australian dollar fell sharply following the data and at US96.2c is around US1.5c lower than yesterday's highs.

Struggling surfwear retailer, Billabong (BBG) has been indecisive with its moves this morning however is up 1.09 per cent at the moment. BBG shares slumped by 49 per cent yesterday after takeover talks with two interested parties fell through. BBG has received a number of broker downgrades today and is down 72 per cent since January.

Iron ore recorded its biggest daily rise since October 2012 overnight, with the recent falls in Australia's second biggest export sprucing up demand somewhat. Ore prices have slumped by around 30 per cent since the February highs. Fortescue Metals (FMG) is up 0.7 per cent

Inner-ear implant maker, Cochlear (COH) is up 3.4 per cent, making it one of the better improvers. Its shares are at depressed levels (close to a 14-month low) after announcing a fall in half year sales and a late product launch.

The gold miners are slumping, with gold prices falling substantially overnight. Newcrest Mining (NCM) is down around 5.5 per cent.

At lunch, 866.7 million shares have changed hands, worth $1.99 billion. 257 stocks are higher, 488 are in the red and 283 are unchanged.

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