Australian Stock Market Report – Midday 8/20/2012

MIDDAY REPORT
(12pm AEST)

Following a weak start to the session, the Australian sharemarket is a few points higher, with the All Ordinaries Index (XAO) up 0.1 pct or 5.7 pts to 4399.5. A number of companies have gone ex-dividend today, which is putting downward pressure on the broader market.

Australia's second largest listed company, Commonwealth Bank of Australia (CBA) is down 2.86 pct or $1.63 to $55.71 following it trading ex-dividend today. The sixth biggest company on the Aussie market, Telstra (TLS) is down 5 pct or 19 cents to $3.71 after doing the same.

When a company goes ex-dividend, it simply means that investors purchasing shares on that day onwards will not be eligible to receive its next dividend payment. CBA will be paying out a $1.97 a share dividend on 5 October, while TLS will be paying out a $0.14 a share distribution on 21 September. The telco has paid out at least $0.28 per share each year since 2005. Both CBA and TLS combined, make up around 10 pct of the Australian sharemarket and is having the biggest impact on keeping the market in the red. To put this into perspective, CBA alone is wiping out almost 10 pts from the ASX 200 index.

The mining sector is holding on to some modest improvements, assisted by the world's biggest mining company BHP Billiton (BHP), which is up 0.48 pct or 16 cents to $33.16. Australia's second largest miner, Rio Tinto (RIO) is down 1.19 pct or 66 cents to $54.69 while Fortescue Metals Group (FMG) is also down by 1.19 pct or 5 cents to $4.15.

This morning, Bluescope Steel (BSL) recorded a $1.04 billion net loss for the 12 months to 30 June. A large loss was expected by both the company and investors, with its shares up 1.25 pct or 0.5 cents to 40.5 cents. BSL is cautiously optimistic about the future, with a joint venture announced with Nippon Steel last week. BSL shares jumped by 53 pct last week; however are still down a touch since the start of the year.

The profit reporting season intensifies this week, with a large number of big name stocks issuing either half-yearly or annual profit results. On Wednesday, BHP, Woodside Petroleum (WPL) and Suncorp (SUN) will issue earnings. On Thursday and Friday, FMG, Fairfax (FXJ), Qantas (QAN), Woolworths (WOW) and Insurance Australia Group (IAG), will announce profit numbers. IAG is the owner of NRMA Insurance.

On the economic front, this week is going to be subdued with the Reserve Bank of Australia's (RBA) minutes from its August interest rate meeting one of the highlights. The market is expecting commentary on the impact of a strong Australian dollar (AUD) on business and the broader economy.

In the region, on Thursday HSBC will issue its update on the health of China's manufacturing industry, which can impact markets across Asia-Pacific.

In the U.S this week, the housing market will remain in focus with a few reports on its health out over the coming days. The FOMC's minutes from the August interest rate meeting will also be of importance. The market is always attentive for hints of further stimulus; however the Federal Reserve (the Fed) seems content to remain in 'wait and see' mode for the time being.

The FOMC is the Federal Open Market Committee, which is a part of the U.S Federal Reserve.

Following the end of daylight savings, major Asian markets will be trading between the hours mentioned below until October this year.

The Hong Kong sharemarket trades in two sessions each day and will now open for trade between 11.30am (AEST) and 2pm (AEST) while the second session is between 3.30pm (AEST) and 6pm (AEST).

Out of Japan, the first session will be between 11am (AEST) and 1pm (AEST) while the second session is between 2.30pm (AEST) and 5pm (AEST).

The Singapore exchange will be open for trade between 11am and 2.30pm (AEST) for the first session and then between 4pm and 7pm (AEST) for the second.

U.S futures are currently pointing to a largely flat start to trade tonight. Dow futures are down 1 pt. The U.S market trades between 11.30pm (AEST) and 7am (AEST).

So far in trade at lunch, 929 million shares have been traded worth $3.43 billion. 471 shares are up, 285 are lower and 304 are currently unchanged.

The Australian dollar (AUD) is buying US104.3 cents, €84.5 cents and £66.51 pence.

The AUD is the world's fifth most traded currency behind the U.S dollar, the Euro, Japanese Yen and British Pound. The AUD accounts for around 7 pct of all foreign exchange trades.

[Kick off your trading day with our newsletter]