MIDDAY REPORT

Local stocks have started the trading week in the red, after US leaders failed to agree on a deal to raise the government's borrowing power, or so-called "debt ceiling" before the August 2nd deadline. The debt ceiling is currently at $14.3 trillion, and the Democrats want it increased by $2.4 trillion in order to meet legal obligations, such as Social Security and Medicare payments. The Dow Futures is pointing to a negative start for Wall Street following the gridlock over the talks, which has sent markets around the region into the red. At lunchtime in the East, the All Ordinaries Index (XAO) is down 37pts or 0.8pct to 4637.1.

The uncertainty over the debt ceiling agreement has sent investors fleeing to the safe haven of gold. Early this morning, the Comex gold contract hit a fresh record high of US$1624.30 an ounce. Shares in Newcrest Mining (NCM) have risen by 1.2pct to $40.48 in early trade.

Elsewhere, it's a sea of red on the local market with financials, key mining and energy players all under pressure.

While toll road operator Transurban Group (TCL) has fallen 3.2pct in early trade to $5.19 after the Canada Pension Plan sold its 12pct stake in the company, worth $903 million, or approximately 170 million shares.

The Australian dollar is buying US108.2c, £0.666 and €75.57c.

(From Juliette Saly, CommSec Market Analyst)