Australian Stock Market Report

MIDDAY REPORT
(12.10pm AEST)

Yesterday the Australian stock market closed 14 points higher. 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 this morning, down 9 points in early trade, as mining and banking stocks lost ground. By lunchtime the All Ordinaries Index (XAO) was down 12 point at 4,375.9 points.

The profit reporting season is now in its last days, today we saw the realised of Full year results from: Southern Cross Media Group (SXL), Transfield Services (TSE) and WorleyParsons (WOR).

Free to air commercial TV and radio stations owner, Southern Cross Media Group (SXL) released its report to the market today. Southern announced its Full Year Net profit after Tax (NPAT) increased by 48% to $95Million. It was a strong result and the company listed strong margin growth even as its total revenue fell. Management said that the company ´´is well positioned in a difficult advertising market ...the energy and commitment our staff have shown in embracing our vision has driven much of this success´´. SXL shares fell slightly to $1.20.

Operations, maintenance, and project management services firm, Transfield Services (TSE) reported its Full Year numbers today. Transfield's Full Year (NPAT) fell 15.3% to $85Million, the company has listed many downgrades to earning over within the year and TSE's NPAT (pre‐amortisation) of $106Million was in-line with the firms April guidance. Today TSE's CEO Peter Goode announced he would be stepping down from the running of the company on the 30th of September this year. This was a surprise for the market, and non-executive director Mr Graeme Hunt will fill in the short term. TSE's share price has come off by 6.6% in early trade after falling over 10% just after the release of its results today.

Professional service provider to the oil & gas, power, metals and infrastructure sectors, WorleyParsons (WOR)today released its Full Year numbers. Worley's reported Full Year earnings before Income Tax (EBIT) lifted by 11.8% to $530.3Million. The result was strong in a tough environment but traders were not happy with the weaker than expected margins over the period. Earnings growth in Worley's hydrocarbon unit increased by 24% and the firm did reconfirm its job cut announcement, to the market yesterday, because of project delays. Worley's share price fell over 1.4% to $25.83.

The S&P/ASX 200 Materials sector was the real drag on the market again today down 1.15% with the S&P/ASX 200 Energy sector also starting in the red, off 0.4%. The mining sector lost ground this morning, after base metal markets continued to slide on the London Metals Exchange (LME) overnight and the iron ore price fell to US$94.30 a dry ounce. Yesterday, global investment bank Morgan Stanley cut its price forecast for spot price of iron ore, saying the price could fall as low as $US83 a dry tonne over the next few months. On the flip side the Brazilian mining giant, Vale (the world's largest iron ore producers) said yesterday that "Iron-ore below $120 a metric ton is a "short-lived" situation." Today Australia's second largest miner, Rio Tinto limited (RIO) gave back 2.6% to $50.43 while the larger BHP Billiton (BHP) fell back another 1.5% to $32.60 by lunchtime. BHP was back in the media today after a Wall Street Journal article said it had been told by management that "BHP was cutting back its staff levels due to its roll back of plans at Olympic dam." Fortescue Metals Group Limited's (FMG) shares have fallen by 3.85% to $3.75 and Atlas Iron Limited (AGO) off another 6.98% to $1.40 after reporting a lower than expected Full Year profit earlier this week.

Newcrest Mining group (NCM) yesterday, confirmed speculation in the market that it had closed its PNG New Ireland province Lihir Gold mine, since Sunday, due outstanding issues. Management today announced it will resume mining at Lihir after agreeing with landholders on compensation payments. The closure of Lihir was a major concern for Newcrest as it generates 40% of NCM's total revenue. Today NCM's shares have fallen another 0.64% to $26.53. The US gold price was also lower overnight, giving back US$7 an ounce. St Barbara Limited (SBM) and Regis Resources Limited (RRL) both lost over 1% in early trade.

The energy sector today was led by overseas weather news. Overnight the US oil price crept back above US$96 a barrel after Tropical Storm Isaac was upgraded to a Hurricane as it moved towards the US. Santos Limited (STO) shares off 0.39% to $11.48, Oil Search Limited (OSH) higher by 0.13% to $7.43 while Beach Energy Limited (BPT) added 1.85% to $1.24. Beach Energy has announced its Full Year 2012 results today, its numbers were ahead of market expectations, Underlying NPAT of $122 Million, they also have exited the market with strong guidance for FY13. Beach's Cooper Basin shale program continues to give positive results from its wells. Our only listed petroleum refiner, Caltex Australia Limited´s (CTX) shares rose in morning trade up 1.3% to $15.58.

The S&P/ASX 200 Financials index moved slightly lower by lunch off 0.04%. The big 4 banks were holding the index down while the insurers were climbing. ANZ Banking Group (ANZ) slightly weaker off 0.3% to $24.86. National Australia Bank (NAB) giving back 0.3%, while Commonwealth Bank of Australia (CBA) lost a little, off 0.06%, to $54.37 this morning. The insurers were mainly higher with QBE Insurance Group Limited (QBE) up 0.19% to $13.04 and Insurance Australia Group Limited (IAG) off slightly to $4.145cents and Suncorp Group Limited (SUN) at $8.89.

Elsewhere, Virgin shares fell another 0.5% and, rival in the Sky, Qantas Airways (QAN) lost 2% while Sydney Airport (SYD) added 0.16% to $3.20. Travel firm, Flight Centre (FLT) delivered a record breaking Full Year result yesterday and today its share price lifted by 2.7%, in early trade, to $24.35.

The Australian dollar (AUD) is buying US103.59 cents, €82.50cents and £65.50 pence.

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