Australian Stock Market Report – Midday 7/24/2012

LUNCHTIME REPORT
(12.30pm AEST)

The Australian share market remains in the red in the early session, but importantly the selling isn't as significant as what we saw on US and European markets overnight. Investors there sold out of equities on ongoing concerns about the Eurozone debt crisis and after companies missed earnings expectations, including bellwether McDonald's. Locally, investors are treading water ahead of the release of the flash HSBC manufacturing gauge out of China, and a speech by RBA Governor Glenn Stevens. At lunchtime in the East, the All Ordinaries Index (XAO) is down 15.4pts or 0.4pct to 4143.8.

Financial stocks are doing most of the damage, with shares in the ANZ Bank (ANZ) down 1pct to $22.60 while Westpac (WBC) is off 0.6pct to $22.41.

Mining stocks also continue to be under pressure in response to weaker metals trade in London overnight. Fortescue Metals Group (FMG), which fell 7pct on our market yesterday, has shed a further 4pct at lunchtime to be trading at $3.89. Rio Tinto (RIO) shares are off 0.8pct to $51.13.

Embattled surf wear retailer Billabong (BBG) has seen a sharp spike in its share price today, following another takeover offer from private equity firm TPG. TPG is offering $1.45 per share, valuing Billabong at $695 million. It's a sharp discount to the $3.30 per share offer Billabong knocked back in February. Billabong has recently completed a $225 million capital raising and closed yesterday at $1.10 per share. At lunchtime in the East, BBG is up 20pct to $1.32.

The Australian dollar remains subdued against the greenback and at midday in the East is buying US102.7c. It's also worth €84.71c and £0.662.

[Kick off your trading day with our newsletter]