Australian Stock Market Report

MIDDAY REPORT
(1pm AEST)

Yesterday the Australian share market closed higher for the third straight day, with the All Ordinaries Index (XAO) adding 1.3% or 52 points to 4,156 points.

Overnight global markets rallied higher on the news that The People´s Bank of China cut its benchmark 1 year interest rate by 25bps (¼%) and cut is deposit rates and pushed back its planned tougher banking reform by one year to help boost the Chinese economy. European and commodity market rallied on the news, pushing aside the fact that the ratings agency Fitch had cut Spain's credit rating overnight.

In the U.S, the markets started off well, the Federal Reserve Chairman Ben Bernanke gave his planned Congressional testimony. Mr Benancke mentioned his concern about the crisis in Europe and its impact on the US economy, but failed to mention anything about new stimulus to help boost US growth. The US Dow Jones did finish stronger but fell over 80 points in the last hour of trade.

This morning the market opened in positive territory but only lasted there for a few minutes, with the All Ordinaries Index (XAO) falling by over 20 points in the first 10 minutes of trade. The Australian market will be closed on Monday for the Queen's Birthday holiday and this would mean that many overseas and local investors would not like to be "long" (holding large position in stock) into the long weekend. As well as the long weekend selling pressure the negative data out from Japan in early trade took its toll. Quarterly growth in Japan was revises higher but Japan's trade deficit widen.

Bank of Korea decided to leave interest rates on hold at 3.25% and US futures turned negative.

At lunchtime in the East, the All Ordinaries Index (XAO) had fallen by 36.8points to 4,119. Today all key sectors on the red by lunchtime, with early weakness in the Banking and insurance sectors and gains for the large table miners and some property trusts.

The standouts by lunch time were BHP Billiton Limited (BHP) and Rio Tinto Limited (RIO) with the market heavy weights both up over 1%. The broader S&P/ASX 200 Materials sector was lower off 0.7%, one of the better performing sectors. Fortescue Metals Group Limited (FMG) off 2.56% to $4.56, OZ Minerals Limited (OZL) off 5.62% to $8.40 and copper-gold miner PanAust Limited (PNA) off 3.53% to $2.73. The gold price tanked overnight as investors de-risked portfolios, US$ gold fell over US$40 an ounce. In Early Asian trade the gold price fell even more, off another $22 to US$1,567 an ounce, as the US Dow future market turned lower and interest for the glossy metal has decreased. Newcrest Mining Limited (NCM) off 5.59% to $24.35 and Regis Resources Limited off 2.74% and Kingsgate Consolidated Limited off 5.25% to 45.60.

The S&P/ASX 200 Energy sector was off 1.3% after the oil price held up above US$85 a barrel overnight but in early Asian trade it has also fallen now off US$2 a barrel to US$82.75 a barrel. Woodside Petroleum Limited (WPL) off 1.3%, oil refiner Caltex Australia Limited (CTX) up slightly to $13.63 and Aurora Oil & Gas Limited (AUT) one of the best stocks in the sector up 0.3% to $3.32 after saying it would not extend its current planned takeover timetable or lift the offer prices for Eureka Energy Limited (EKA) off 1.6%.

The banking sector lower as the market awaits tomorrows Chinese economic data and The International Monetary Fund's (IMF) update on Spain due out on Monday night. S&P/ASX 200 Financials sector off 1.17%, The Australia & New Zealand Banking Group Limited. (ANZ) today announced it will pass on the full 25 basis point rate cut by the Reserve Bank of Australia (RBA) to its customers, as of June the 15th, lowering its variable mortgages and small business lending interest rates to 6.80%. ANZ share price off 1.3% to $21.51. So far the rest of the big 4 banks have not made any announcements, Commonwealth Bank of Australia (CBA) off 1.12% to $50.51 and Westpac Banking Corporation (WBC) off 1.4% to $20.48. Suncorp Group Limited (SUN) off 2.97% to $7.83.

Elsewhere, poker and gaming machines operator Aristocrat Leisure Limited's (ALL) Chief Executive Jamie Odell said in an interview that the company expects to see a lift in sales of its "Slot Machines" In US, ALL share price still lower in a negative market off 0.53%. Telstra Corporation Limited (TLS) also lower off 0.5% to $3.64 and AGL Energy Limited (AGK) off 1.7% to $14.86. James Hardie Industries Se (JHX) up 1.5% to $7.35.

Australia's largest airline, Qantas (QAN) shares turned the corner this morning, after a week of negative trading, but by lunch the early gains were wiped away and the price had fallen another 1.4% to $1.05

Yesterday, global pallet and container provider, Brambles Limited (BXB), recommenced trading after the announcement and completion of its $333 million institutional capital raising. Today Brambles started its $115 million retail investor capital raising. BXB shares fell 4.95% yesterday and were off another 2.8% in early trade.

The Australian dollar received a boost yesterday from the better than expected job numbers but overnight fell from US99.57c to now hold at US$0.9845, £0.6358 and €0.7866.

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