Australian Stock Market Report – Midday 7/9/2012

LUNCHTIME REPORT
(12.45pm AEST)

Friday night the overseas markets were hit by weak U.S. job numbers and concern over global growth. The all-important U.S. non-farm payroll numbers came in below market expectations as 80,000 new jobs created over the month of June was just not enough to settle markets. European and U.S. investors were also cautious ahead of the new global growth forecasts from the International Monetary Fund (IMF). The head of the IMF Christine Lagarde said in a speech on Friday, in Japan, that she will revise lower the outlook in 8 days.

Locally, the All Ordinaries Index (XAO) started of weaker, off 32 points or 0.8%, mining, energy and banking stocks were hit hard at the start of trade. At lunchtime in the East, the All Ordinaries Index (XAO) is down 29 points or 0.7% to 4,170.

Energy stocks were among the worst performers this morning, off 1.5%. The S&P/ASX 200 Energy sector was hit hard after the U.S. oil price lost over 3.5% on Friday night and only gained a few cents in early Asian trade. Shares in Woodside Petroleum Limited (WPL) were off 1.8% to $31.03, Santos Limited (STO) lost 0.14% to $10.67 while Caltex Australia Limited (CTX) was down 0.78% to $14.07.

The S&P/ASX 200 Materials sector fell nearly 2% by lunchtime as lower metal prices and market concerns hit the sector. The biggest loss this morning was felt by mineral sands miner Iluka Resources Limited (ILU) after the firm has downgraded its 2012 sales forecasts. The cut to Iluka's sales was because of "deteriorating economic conditions". Iluka produces mineral sands, rutile and zircon, are used in the manufacturing of pigments used to coat building materials and with the slowdown in global construction the firm has been hit hard. Iluka shares off 20.7% to $9.27, and like stocks Mirabela Nickel Limited (MBN) off 5.7% to $0.24.5cents and Exxaro Resources Limited (EXX) also lower.

Our big name miners, BHP Billiton Limited (BHP) off 0.3% to $31.65 and Rio Tinto Limited (RIO) off over 1.7% to $56.81 while Fortescue Metals Group Limited (FMG) higher up a few cents to $4.88.

The gold sector also held back after a large slide in the U.S. gold price on Friday, off over US$25 an ounce. Newcrest Mining Limited (NCM) off 2.26% to $23.58, while Kingsgate Consolidated Limited (KCN) off 3.4% $5.08 and Regis Resources Limited (RRL) off 2.5% to $4.28. Resolute Mining Limited (RSG) off 4.47% to $1.39.

S&P/ASX 200 Industrials sector was only off 0.3%, the sector losses were limited after good news from Leighton Holdings Limited (LEI). The construction firm told the market it has sold its waste management business for $182 million. Leighton sold its Thiess waste management business was sold to raw materials and energy management firm Remondis AG & Co KG, with expectations that deal will be complete by the end of the year. Leighton share price lifted 0.36% to $16.54.

Financial stocks were lower. The Commonwealth Bank (CBA) fell over 0.5% to $53.73 while the Australia and New Zealand Banking Group Limited (ANZ) off 0.6 % to $22.44. Shares in Macquarie Group (MQG) were down 1.26pct to $25.58.

Elsewhere, Telstra Corporation Limited (TLS) share price increased as investors ran into the safety of defensive stocks, Telstra climbed 0.8% to $3.77. Coca-Cola Amatil Limited (CCL) lifted over 1% to $13.26 and Energy World Corporation Limited (EWC) up another 2.78% to $0.37.

The Australian dollar is now trading at US102.05c, £0.6588 and €83.01c.

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