Australian Stock Market Report – Midday 8/28/2012

MIDDAY REPORT
(12.20pm AEST)

Yesterday the local share market closed slightly weaker and today the start of trade was very muted, we had low volumes being traded and once again investor caution leading the way.

Overnight the US market were in a holding pattern ahead of the Federal Reserve yearly conference that kicks off at the end of this week and ahead of the return to work and school next week after spring break next Tuesday.

The All Ordinaries Index (XAO) opened slightly weak, moved into the green then gave back most of its gains after the first hour of trade. The S&P/ASX 200 Materials sector was the real drag on the market today starting down 1.3% with the S&P/ASX 200 Energy sector also starting in the red.

By lunchtime the All Ordinaries Index (XAO) was up 5 point at 4,378 points.

The profit reporting season is now starting to wind down, with a smaller number of businesses announcing earnings today, some of the highlights have been Flight Centre Limited (FLT) and Virgin Australia Holdings Limited (VAH).

Virgin Australia released its Full Year results today. Virgin´s revenue increased by 19.7% to $3,913Million and Profit up 134% to $22.8Milion. Virgin also said it was winning market share as expected in the corporate and government markets. The result was at the bottom end of guidance and the lack for new guidance for FY13 held investors back today. Virgin shares fell 4.17% to $0.46, still just off 2 year highs. Rival in the Sky Qantas Airways (QAN) added 1% and Sydney Airport (SYD) up 0.95% to $3.18.

Travel firm, Flight Centre (FLT) delivered a record breaking Full Year result today. Full Year Net Profit after Tax (NPAT) lifted by 43% to $200.1Million, revenue was stronger than expected and all areas of business listed strong results. Flight centre told the market today it was targeting 6‐8% sales network expansion in the current financial year and expects to see sold returns. Flight Centres share price lifted by 1.27%, in early trade, to $23.90.

Today Seven Group Holdings Limited (SVW) released its Full Year Net Profit (NP) to the market. The numbers came in slightly higher than the market had expected thanks to good growth in its industrial division helped by demand for its Wes Trac products. Seven Group's NP came in at $165.9Million doubling over the year. SVW's media unit did list soft growth as expected and management did tell the market it expects its media to stay that way over the next 6 months. SVW's share price lifted over 4.8% in morning trade to $7.97. Also in the media space News Corporation (NWS) lifted 0.5% and Seven West Media Limited (SWM) up 0.34%.

News in the food processing space today, Goodman fielder (GFF) has sold its oil and spreads business (Integro) for $170Million to a consortium including the (Aussie listed) GrainCorp (GNC) and Gardner Smith. This is in-line with Goodman's strategy to slimline its core businesses and the sale will help the firm pay down current debt levels. Goodman shares 0.93% to $0.54.

The mining sector lost ground this morning, Australia's second largest miner, Rio Tinto (RIO) gave back 1.09% to $51.53 while the larger BHP Billiton (BHP) also lower down 0.36% to $32.93. Fortescue Metals Group Limited's (FMG) shares have fallen by 0.88% to $3.96 and Atlas Iron Limited (AGO) off 5.3% to $1.51 after reporting a lower than expected Full Year profit yesterday. Newcrest Mining group (NCM) confirmed speculation in the market that it had closed its PNG New Ireland province Lihir Gold mine due outstanding issues. NCM shares were down over 6% now only down 3.2%

The energy sector is very volatile again today , the US$ oil price fell back overnight after news that US Gulf oil refiners would be closed for over a week and therefore the buyers or raw NYMEX Crude have really disappeared from the market. The US oil price is now holding at US$ 95.60 a barrel. Tropical Storm Isaac is likely to hit the US Gulf Coast with hurricane force in the next 2 days. Santos Limited (STO) shares added 0.7%, Oil Search Limited (OSH) higher by 0.26% to $7.43 while Beach Energy Limited (BPT) gave back yesterday's gains off 2.3% to $1.24.

Our only listed petroleum refiner, Caltex Australia Limited´s (CTX) shares were flat in early trade at $15.27.

The S&P/ASX 200 Financials index moved slightly higher by lunch up 0.52%. The big 4 banks are mixed, with ANZ Banking Group (ANZ) slightly higher up 0.89% to $24.92. National Australia Bank (NAB) adding 1.2%, while Commonwealth Bank of Australia (CBA) gave back another 0.44% to $54.40 this morning. The insurers were mainly higher with QBE Insurance Group Limited (QBE) off 0.76% to $13.04 and Insurance Australia Group Limited (IAG) up 0.7% to $4.15 and Suncorp Group Limited (SUN) added 0.8% to $8.83.

The Australian dollar (AUD) is buying US103.52 cents, €82.97cents and £65.70 pence.

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