Australian Stock Market Report – Midday 8/2/2012

Lunchtime REPORT
(12.30am AEST)

The Australian share market lost some ground for the first time in five trading sessions yesterday. Overnight most European markets moved higher as investors positioned themselves ahead of the European Central Bank (EBC) meeting tonight. US markets were only slightly lower before the outcomes of the 2 day meeting of the US Federal Reserve (FED RES) were revealed. Unfortunately the FED RES did not give investors what they were expecting. The views of the Fed members were in line with our current view and we had not anticipated any beg announcement last night but many had. The Fed said that "Economic activity did decelerate somewhat over the first half of this year," the FED said it will closely monitor incoming information and will provide additional support if needed. So the markets are now back in a wait and see mood again.

After the close of the US markets the head of the International monetary Fund, Christine Lagarde said "the IMF stands by Greece "Lagarde also restated her call for more euro zone action.
The local share market opened slightly higher this morning, at the open of trade the All Ordinaries Index (XAO) was up 3 points helped by large mining and energy players, while coal, gold miners and retailers lost ground.

By lunchtime, the All Ordinaries Index (XAO) had held on to a 2 point gain at 4,285 points.
At 11.30am AEST we received the latest ABS retail sales data for the month of June. The result was better than the market had expected (0.6%) and slightly higher than our CommSec view (0.9%) with a gain of 1%. Retail sales were higher for the 2nd month in a row helped by lower rates and discounting. The market did not really list any reaction from the report, although many analysts have now reduced their expectations on an interest rate cut in August.

The S&P/ASX 200 Financials sector was lower this morning, but only by 0.1%, the big 4 banks a little quiet today ahead of the ECB decision. Commonwealth Bank of Australia (CBA) gave back 0.9% to $56.75 and Australia and New Zealand Banking Group Limited (ANZ) added 0.5% while Westpac Banking Corporation (WBC) also added 0.47% to $23.35. Insurance and property stocks also mixed with Dexus Property Group (DXS) the best performer up 2.07% to $0.98.

The S&P/ASX 200 Materials sector made some early gains up 0.5%. The big name stocks like: BHP Billiton Limited (BHP) and Rio Tinto Limited (RIO) only added a few cents, while Iron ore producer, Fortescue Metals (FMG) gained over 3% to $4.28. Atlas Iron Limited (AGO) also higher up over2% and Mount Gibson Iron Limited (MGX) lower, off another 2.1% with BlueScope Steel Limited up 3.92%.

Our largest listed gold producer, Newcrest Mining Limited (NCM) started off weaker and slowly made back ground as the morning session went on, to finish down $0.06, by lunchtime, to $23.40. The US dollar gold price lost more ground overnight, now at US$1,600 an ounce.

S&P/ASX 200 Energy sector was the best performing sector yesterday morning, helped by the US$ oil price moving back above US$88 a barrel overnight. The US dollar oil price is now holding at US$88.86 a barrel. Oil Search Limited (OSH) added 1.1% and Santos Limited (STO) off 0.33%. Woodside Petroleum Limited (WPL) gained 1.67% in early trade to $34.17 and Origin Energy Limited (ORG) slightly higher, up 0.67%.

Elsewhere, News Corporation (NWS) and Consolidated Media Holdings Limited (CMJ) in focus after the official go ahead was given by the Australian Competition and Consumer Commission (ACCC) over News Corps $2billion takeover of CMJ. News Corp share price gained 0.36% to $22.06 while CMJ flat. Fairfax Media Limited (FXJ) gave back 3.77%.

The Australian dollar is worth US104.77c, €0.8556 and £0.6749.

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