Australian Stock Market Report – Midday 7/26/13

MID-SESSION UPDATE
(12.15pm AEST)

The Australian share market is flat at lunchtime in the East, but remains on track for a weekly win of 1.3 per cent.

Energy and financial stocks are in the black in early trade, but once again mining stocks are lagging. The materials sector is down by 0.5 per cent at lunchtime due to falls from BHP Billiton (BHP) and Rio Tinto (RIO). Overnight the companies announced plans to spend more in Chile, with a combined $3.3 billion investment into Chile's Escondida mine of which Rio holds a 30 per cent stake. The market was expecting the miners to spend some money in this area so today's fall is actually from weakness on the London metal exchange overnight rather than a fall in base metals prices.

Elsewhere Sigma Pharmaceuticals (SIP) has fallen 4 per cent to 71.5 cents in early trade on a profit warning. SIP announced to the market today it expects its first half earnings will be dragged down by initiatives such as setting up online shopping. ´´Sales have been slightly stronger than last year and the impact is expected to flow through to gross profit. Notwithstanding the stronger gross profit, the reported first half EBIT (earnings before interest and taxation) result is likely to be below the prior corresponding period as a result of a higher cost base arising from investment in key areas of the business, including Multi Channel," said the company in its statement issued to the ASX today. SIP still expects its earnings to increase over the financial year.

In early Asian trade, Japan's NIKKEI Index is down 1.5 per cent while the Shanghai Composite in China is down 0.4 per cent.

On our market so far, a total of 854 million shares have changed hands, worth $3 million. 385 are up, 337 are down and 267 are unchanged.

The Australian dollar is trading at US92.65c.

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