Australian Stock Market Report – Midday 8/6/13

MID-SESSION REPORT
(11.40am AEST)

The Australian share market is flat in the early session, following a mixed session on US and European markets and as investors tread water ahead of this afternoon's rate decision.

Money markets are pricing in a 106 per cent chance that interest rates will be cut to new 53 year lows today of 2.5 per cent. In fact, that means there is now a 6 per cent chance of a 50 basis point cut, although CommSec believes we will only see a 25 basis point reprieve for home owners.

The financial sector is weaker by 0.1 per cent in the early session while the miners are own 0.1 per cent and the energy sector is off by 0.8 per cent.

Company reporting season is underway and today we have heard from mining contract firm Downer EDI (DOW and hearing implant maker Cochlear (COH).

DOW has reported an 81 per cent lift in FY13 profit to just under $204M, although last year's result was impacted by a $73M write-down. Underlying net profit rose by 10.4 per cent to $215.4M while revenue rose from $7.9B to $8.4B. DOW has flagged revenue could fall by up to $600M next financial year due to a slowdown in the mining sector. DOW shareholders will receive an 11c per share dividend, up from 10c last financial year. DOW is up 2.3 per cent in the early session to $4.00.

Hearing implant maker Cochlear (COH) has more than doubled its annual profit to $132.6M as the company continues to recover from a product recall which weighed on last year's result. Earnings growth did slow in the 2H as previously forecast by COH as customers held out for the release of the next generation Nucleus 6 implant. COH shares are steady at lunchtime in the East to $59.15.

The Australian dollar remains below US90c ahead of the outcome of the RBA rate decision. The Aussie is buying US89.2c, €0.6723 and £0.5808.

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