Australian Stock Market Report – Midday 7/9/13

MID-SESSION REPORT

(12.30pm AEST)

Following on from a 0.6 per cent fall yesterday, the Australian market is being pushed higher by global market strength. Overnight, US stocks rose for the third straight session, while the major European markets improved by as much as 2 per cent thanks to solid data. On the economic front, Chinese inflation remains under control while Australian business confidence is sluggish.

Travel agent, Flight Centre (FLT) is up 3.9 per cent and is at an all-time high. FLT shares are 62 per cent higher since January. Investment bank, Macquarie Group (MQG) received a broker upgrade today and is up 3.9 per cent.

The miners were the worst performers on Monday, driven by weaker commodity prices (and a stronger US dollar). Today however, BHP Billiton (BHP) and Rio Tinto (RIO) are both up around 1.5 per cent. The major banks are contributing 21pts of the 60pts rise in the All Ords.

Both consumer and business inflation reports were issued in China today at 11.30am (AEST) and is unlikely to currently be a concern for Chinese officials. Consumer Prices (CPI) jumped from 2.1 per cent to 2.7 per cent Year on Year (YoY), while Producer Prices (PPI) is down 2.7 per cent YoY. Food prices are higher however, with pork rising by 4.5 per cent; beef up 0.8 per cent while vegetable prices are down 5.2 per cent over the year. Business inflation tends to lead consumer prices, as price changes are (theoretically) passed onto consumers.

The results of the NAB business survey were issued at 11.30am (AEST) today; with clear signs that businesses are still remaining cautious (perhaps ahead of the federal election). This despite a US14 cent fall in the Australian dollar over a three month period. This coupled with the most favourable interest rate setting in 53 years. Business conditions are sitting at 4-year lows. Conditions are poor in retail, manufacturing and mining. Business confidence rose from -0.6 to +0.2. A reading above 0.0 indicates a level of optimism.

At lunch, 684 million shares have changed hands, worth $1.695 billion. 480 stocks are higher, 247 are in the red and 259 are losing ground.

The Australian dollar has lost some ground in the day session, buying US91 cents. Our dollar hit a low of US90.8 cents and a high of US91.4 cents overnight.

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