Australian Stock Market Report

LUNCHTIME REPORT
(12.30pm AEST)

Today the market has reversed yesterday's strong run, positive news out of Europe was not enough to keep the momentum from continuing ahead of the outcome from the US Federal Reserve tonight. Overnight the German Constitutional Court formally approved The European Stability Mechanism (ESM), paving the way for the Eurozone's permanent rescue fund to come into operation. While a positive decision had been expected the euro markets and currencies rose. The UK market was a little weaker even with better than expected job data but flat commodity prices did take its toll. The outcome of the Dutch general election showed that voters were willing to follow the Pro EU-austerity party which was another win for the ESM.

US markets ebbed and flowed in and out of positive territory all day before ending slightly higher. The possibility of the Federal Reserve announcing another round of quantitative easing weighted on investor minds. For the tech sector the focus was squarely set on the releases new Apple iPhone 5. The iPhone 5 met analyst expectations but the overall the concern was about the reduction in price of its older models in the market. Some analysts think this is a push to grow market share while other feel it is apple just selling of old stocks at a discount. Apple shares were 1.3% higher at the close of US trade.

Our market was hit by low trading and pricing of commodities and lack of interest in retail stocks in early trade. At lunchtime in the East, the All Ordinaries Index (XAO) was off 15 points to 4,368 points. And other Asian markets were mixed in a quiet morning session. The Bank of Korea left its key interest rate on hold at 3% this did surprise the market as it had expected that rates would be cut by 25bp (1/4%) after the bank cut rates in July. Foxconn Technology (TPE) the major maker of the Apple iPhone shares on the Taiwan exchange off 0.8% in early trade but still up the price has doubled over the last year.

On our exchange the big news story today is Myer Holdings (MYR) after the release of its Full Year (FY) numbers for the year to July 28th 2012. Myer reported a 12.7% fall in full year net profit (NP) to $139 Million this was in line with Myer's guidance of "up to 15%" slide in profit of the Full Year. Total sales fell 1.3% over the year to $3.1 Billion, while like-for-like sales (looking at the sale store and hours as the prior year) were down by 2% a little stronger than market expectations. 4th Quarter sales were helped by government stimulus and this helped the 4th quarter result beat the street. The company did announce a few one of charges and benefits most of the charges due to the restructure at present and the benefits related to tax, inventories were a little higher at the end of year but we feel this is due to Myer now looking to directly source more of its products. Profit was squeezed and Myer did not give any clear guidance for FY13 but did say they expect to see continued cost pressures over the year. Myer also cut its final dividend to $0.09 a share below the $0.11 it paid out this time last year. The Myer share price started off stronger then fell into the red, at lunch Myer was down 0.5% to $1.83. Rivals in the department store and retail space were also lower, David Jones Limited (DJS) off 1.8% to $2.35 and Harvey Norman Holdings Limited (HVN) off 1.36% to $1.99. Supermarkets, department stores, home improvement and office supplier, Wesfarmers Limited (WES) off 0.7% and rival Woolworths Limited (WOW) off 0.17% to $28.89.

Today the material and finance sectors were very quiet with the S&P/ASX 200 Materials index off 0.03% and the S&P/ASX 200 Financials index down by just 0.4%.

Overnight the US$ spot iron ore price overnight, turned lower back below US$100 a dry tonne. Iron ore players Fortescue Metals Group (FMG) share prices gave back yesterday's gains and fell over 2% to $3.39 while and Rio Tinto (RIO) added 0.4% in early trade to $55.35. Our largest listed miner BHP Billiton limited (BHP) flat at $32.85. One of the standouts in the material space Iluka Resources Limited (ILU) up 2.4% to $9.93 while Arrium Limited (ARI- the old - Onesteel) lost another 5%.

Financial stocks listed small losses, with National Australia Bank (NAB) down by 0.3 to $25.33. Commonwealth Bank of Australia (CBA) lost 0.05% to $55.04 and ANZ Banking Group (ANZ) gave back 0.6% to $24.03.

The healthcare sector continued to lose ground this morning. S&P/ASX 200 Healthcare index fell by 1.17% and the biopharmaceutical company CSL Limited (CSL) gave back 1.2% in early trade to $44.22. Bionic ear implant maker, Cochlear (COH) gained 0.4% to $67.84. Sigma Pharmaceuticals Limited (SIP) resulted its half year results today the shares fell over 2% in early trade to $0.67.5 cents. Sigma's sales revenue did increase up 3.5% year on year but margins (as expected) were impacted by changes over the last year to the Government PBS. The firms NPAT fell to $26.1 Million.

After strong selling of utilities sector stocks yesterday, these stocks are back in favour today, with SP AusNet (SPN) up 0.5% and Australian Pipeline Trust and APT Investment firm APA (APA) holding at $4.76 Shares in Telstra (TLS) also climbed higher up 0.78% to $3.85.

Elsewhere, Lend Lease Group lost another 2.7% to $7.61 and global pallet provider Brambles Limited (BXB) also lower off 0.7% to $6.86.

The Australian dollar is buying US104.83c and €0.8116.

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