Australian Stock Market Report

LUNCHTIME REPORT
(12.55pm AEST)

Today starts a new financial year and stock market investors would be happy to see the end of the 2011 2012 financial yea, as the Australian stocks market fell over 11% last year.

This morning the Australian share market recorded a strong start following on from Friday's positive finish. This morning the All Ordinaries Index (XAO) rose 35 points at the start of trade and by lunchtime the All Ordinaries Index (XAO) was up 47 points to 4183. The market listed gains in the mining and banking sectors while defensive stocks still seem to be out of favour.

Friday's positive outcome from the European Leaders Summit in Belgium lifted overseas markets and the Asian markets this morning.

The new plan to support banks, renew trade relationships and patent agreements was seen as a positive sign. a plan that will help to reduce debt concerns and boost growth.

On Saturday the long awaited official Chinese Purchasing Manufacturing Index (PMI) was released. It beat market expectations but still showed Chinese manufacturing grew at its slowest rate in seven months.

The best performing sector this morning was the S&P/ASX 200 Energy sector up over 1.9% boosted by the strong rally in the oil price. Oil in US dollar terms climbed over 9% on Friday to US$84.84 a barrel. In Asian trade oil fell over 1% but there is still interest in energy stocks this morning. Oil now at US$83.80 a barrel.

The S&P/ASX 200 Materials sector also performed well after solid gains in base metal prices on the London Metals Exchange (LME) and a big lift in the gold price in the US and UK trading sessions. US$ gold rose nearly US$ 50 an ounce on Friday to US$1,599 an ounce. The gold price came of this morning in Asian trade, gold now at US$1,591 off US$13 an ounce. Newcrest Mining Limited (NCM) rallied higher up 3.6% to $23.43 and Kingsgate Consolidated Limited (KCN) up 3.3% to $5.01, while St Barbara Limited (SBM) lost over 11%. St Barbara held back by investor concerns over its merger plans with Allied Gold (ALD) and broker downgrades associated with the deal. Allied shares also lower off 9.6%.

Large global miners, BHP Billiton Limited (BHP) added over 1% to $31.79 while rivals in the iron ore space Rio Tinto Limited (RIO) added 0.5% and Fortescue Metals Group Limited (FMG) lost ground as the day went on to be down 0.2% by lunchtime at $4.89. Copper and gold producers, OZ Minerals Limited (OZL) added 2.5% and PanAust Limited (PNA) also higher up 2.5%. Industrial explosives and fertilisers producer, Incitec Pivot Limited (IPL) was one of the better performers so far today, up nearly 2.5%.

On Friday the retail sector was in the spotlight with the unexpected news of a buyout offer for David Jones Limited (DJS). On Friday DJS rallied 14.6% to $2.59, this morning the share price lost ground off 5.45% to $2.45. Investors now wondering what could be behind the $1.56 Billion bid and the lack of follow up by EB Private Equity the potential UK based takeover group. Its competitor Myer (MYR) rose 4.87% on Friday and this morning added another 1.8% to $1.64.
Wholesale grocery distributor, Metcash Limited (MTS) still in focus after its share price fell over 9.5% on Friday. Today the shares have regained a little ground by lunch the share price rose 1.5% to $3.42. Kathmandu Holdings Limited (KMD) up over 2.5% and JB Hi-Fi Limited (JBH) also higher.

The S&P/ASX 200 Financials sector added over 1.4% this morning. The Australia and New Zealand Banking Group Limited (ANZ) rose 1.8% to $22.43, Westpac Banking Corporation (WBC) gained 1.7% to $21.50 and Commonwealth Bank of Australia (CBA) lifted another 1% 1 pct. Macquarie Group Limited also higher adding over 2.5% to $26.72 and our key insurance stocks also rallied.

The Australian dollar is buying US102.20c, nearly 2 US cents higher than this time on Friday. The Aussie dollar also higher against the Pound and Euro as 1 Aussie will now buy £0.6531 and €80.97c.

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