Australian Stock Market Report – Midday 7/16/2012

LUNCHTIME REPORT
(12.30pm AEST)

On Friday we saw most global share markets rallying higher after the Chinese economic data was not as bad as investors had feared. European and US markets helped by the news out of China reinvigorating commodity prices and better than expected numbers from Key US banks. JPMorgan Chase beat the street with is quarterly results despite the firm increasing the cost of its one off trading loss that has now cost US$5.8 billion and set to climb. California's largest bank Wells Fargo also thrilled the market with strong earning over the last quarter.

Today the share market started off well with The All Ordinaries Index (XAO) up over by 0.8% or 35 points in the first hour of trade. At lunch time the market held on to a 29 point gain with gains in metals, energy and banking stocks.

The market is higher ahead of The International Monetary Funds scheduled released update to its global economic forecasts today (11:30pm AEST). In April the IMF forecast global growth to be 3.5% in 2012 and 4.1% in 2013. However, given the loss of momentum across parts of the global economy, we expect the IMF to trim its expectations. The IMF's Lagarde has already indicated that a downgrade is probable. CBA recently revised down its global growth expectations to 3.4% in 2012 and 3.9% in 2013.

The best performing market sector this morning was the mining sector. BHP Billiton Limited (BHP) rose by 1% to $30.81, Rio Tinto (RIO) added 0.87% to $54.49, Fortescue Metals (FMG) lifted by 2.65% to $4.65. BlueScope Steel Limited (BSL) a standout today, up over 3.4% and Arrium Limited (ARI) the old OneSteel Ltd (OST) up 3.49% to $0.89.

The energy sector is all abuzz with the takeover news from Whitehaven Coal(WHC). Late Friday night billionaire Nathan Tinkler's Company, The Tinkler Group put in firm takeover offer for the WHC worth $5.3billion or $5.20 a share. The offer was backed by conditional letters of support from major global banks. The stock price opened higher by 18.5% to $4.09 and at lunch the shares held at $3.99 up 15.6%.

Oil and gas producer Woodside Petroleum Limited (WPL) added 0.66% to $30.47 and New Hope Corporation Limited (NHC) added 2.6%.

The financial sector also higher with Westpac Banking Corporation Westpac (WBC) increased 1.1% and Australia and New Zealand Banking Group Limited (ANZ) jumped by 0.49% to $22.46.

The focus is back on Seven West Media (SWM) today after calling for a trading halt. The company announced a capital raising, looking to raise $440Million, to help reduce debt help offset weak advertising sales. The Seven West share price closed Friday at $1.68. Fairfax Media Limited (FXJ) off 0.8% and News Corporation (NWS) up 0.42% to $21.53.

The Australian dollar is now at US 102.17 and higher against the Euro at 0.8351.

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