Australian Stock Market Report – Midday 7/12/2012

MIDDAY REPORT
(1pm AEST)

The Australian share market closed marginally lower yesterday and overnight market were held back once again by Eurozone concerns and lack of immediate stimulus help from the US Federal Reserve.

Overnight key European markets moved higher, happy with the news that the Spanish government was looking at running a tight budget control. The US market lost ground after the notes from the last Federal Reserve policy meeting showed that member were happy to wait and see what was going to occur with US growth and not planning on adding more stimulus or cutting rates. Even though the number of FED members looking for change is growing the chance of more quantitative easing will not be imminent. The All Ordinaries Index (XAO) started the day higher up 2 points.

By lunch time, The All Ordinaries Index (XAO) had sold off after the weaker than expected official June job numbers, the index now at 4,113, down 20 points. The strong start for the miners, banks and energy stocks was whittled away as the morning moved on.

Energy stocks were the worst performers on the market yesterday today the sector was one of the best performers in the first hour of trade then gave up its gains. By lunch the S&P/ASX 200 Energy sector was off 0.26%. The early buzz from the higher US oil price overnight and an expected pick-up in demand after last week's better than expected US inventory numbers was cut in the last half hour of morning trade. US Oil rebounded over $2 a barrel to $86.12/bl. Woodside Petroleum Limited (WPL) only up 0.1% to $30.45, shares in Oilsearch (OSH) today fell 0.16% to $6.37 and Santos Limited (STO) flat.

Uranium and coals stocks sold off with Whitehaven Coal Limited (WHC) and Aquila Resources Limited (AQA) off over 5% and Energy Resources of Australia Limited (ERA) off 3.36%. Fuel retailer Caltex Australia Limited (CTX) was higher up 0.3% to $14.14 and service provider to the energy sector WorleyParsons Limited (WOR) also higher up 0.3%.

The Gold price gave back another US$11 to US$1,569 and ounce overnight before regaining ground in a volatile trading session. Our largest listed gold miner Newcrest Mining Limited (NCM) fell over 2.6% to $21.90, with Regis Resources Limited (RRL) and Kingsgate Consolidated Limited (KCN) off 2.3%.

Our big name miners BHP Billiton Limited (BHP) and Rio Tinto Limited (RIO) both lost over 2%, with RIO holding at $54.30 a share. Iron ore players, Fortescue Metals Group Ltd (FMG) off 4.27% to $4.71. Rio told the market today of its management changed, Rio's Chief Operating officer (CFO) Guy Elliott (CFO's) last day is still 18 months away, and we don't expect the news to impact the share price.

Elsewhere financial stocks fell into the red late in morning trade. The big four banks now mixed with Westpac Banking Corporation (WBC) the best performer, up 0.18%, Commonwealth Bank of Australia (CBA) up a few cents, while Australia and New Zealand Banking Group Limited and National Australia Bank Limited (NAB) were lower. Suncorp Group Limited (SUN) was the best performing large insurer up 1.5% to $8.15.

Telstra Corporation Limited (TLS) higher up 0.26% after announcing it had offloaded its TelstraClear New Zealand subsidiary to Vodafone $660 Million. This sale is consistent with Telstra's strategy and cash position. Telstra hit a fresh three and a half year high early in trade and by lunch was at $3.86

Elsewhere, Toll road company Transurban Group (TCL) released its annual toll revenues today. Revenue increased by 5.9%. Toll revenue for the year to 30th of June 2011 increased to $943.9 million. TCL increased 2.8% to $5.84. Energy provider, AGL Energy Limited (AGK) off 0.4% and media firm News Corporation (NWS) also lower off 1% to $21.39.

The Australian Bureau of Statistics (ABS) job data showed released this morning showed our economy loses 27,000 jobs in June. The key unemployment rate moved up, from 5.1% to 5.2%. The participation rate came in lower than expected and with biggest loss of jobs in the full time space. Full time jobs were cut by 33,500 while part time employment increased by 6,600 jobs.

Asian market lower following weak US close and positioning ahead of key Chinese economic data and Bank of Japan interest rate decision later today. South Korea´s Central Bank surprised the market this morning by cutting its 7 Day Repo Rate (key interest rate) from 3.25% to 3.00% for the first time since February 2009.

The Australian dollar (AUD) is buying US101.98 cents and €0.8329.

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