Australian Stock Market Report

LUNCHTIME REPORT
(12.30pm AEST)

Overnight there was only one focus for the US markets, the outcome of the Federal Open Market Committee (FOMC) meeting to decide on a new monetary policy. The market is hoping for additional stimulus and that is exactly what it got. The FOMC announced an open ended Quantitative Easing (QE) program focused on purchases up to US$40Billion worth of Mortgage Backed Securities (MBSs) a month. The program will commence tomorrow and can be increased with additional asset purchases if required to try and promote bank lending and create growth and improve jobs. The FEB will also leave its federal funds rate (set interest rate) at current low levels through to mid 2015 if needed.

The US market and commodities loved the idea of the new QE 3 program the US market rallied higher while the US dollar sold off. Unfortunately more concerns over Greece, if the country will need a 3rd bailout, and bank regulation held back the European markets and the Iron ore and base metal markets were closed before the announcement was released so we will have to wait for tonight's trading to see any reaction.
Our market jumped on the good news band-wagon this morning with the All Ordinaries Index (XAO) adding 40 points at the start of trade. At lunchtime in the East, the All Ordinaries Index (XAO) was up over 45 points to 4,404 points.

The best performing sectors in morning trade were the materials and the industrials. After yesterday's big late trade sell off on the Fortescue Metals Group Limited (FMG) the company came out before the start of trade and passed the shares in a trading halt. FMG shares have fallen over 45% since July after losing 14% yesterday. Rumours have been circulating in the market about FMGs balance sheet and the details of its debt position with its lenders. FMG said "It is the Company's intention to be able to make an announcement in respect of the restructure of its bank related facilities on or before commencement of trading on Tuesday 18 September 2012. FMG shares last traded at $2.99, well off its all-time high of $14.99 cents on the 21st of September 1990.

The rest of the material sector was boosted by the QE3 news the S&P/ASX 200 Materials index added 2.5% in early trade. The sector moved higher even with the base metals markets basically flat overnight and the US$ spot iron ore price off another 2% to US$96 a dry tonne. Rio Tinto (RIO) added 2.7% in early trade to $56.51 and our largest listed miner BHP Billiton limited (BHP) up over 1.6% to $33.34. One of the standouts in the material space yesterday Iluka Resources Limited (ILU) added another 3.34% to $10.25. The steel stocks managed to move higher today with Arrium Limited (ARI- the old - Onesteel) reversing yesterday's selloff up 3% and BlueScope Steel Limited (BSL) up 4.6% to $0.39.75cents

The gold price went for a solid run in US trade closing up over US$30 an ounce at US$1,772 an ounce. Newcrest Mining Limited (NCM) added 5.88% to $27.97 and Alacer Gold Corp. (AQG) up over 9% to $6.75 with St Barbara Limited (SBM) up 10% to $1.93. Medusa Mining Limited (MML) up over 11%

Today the retail sector rose 0.3% by lunchtime. Yesterday, 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. The Myer share price started off stronger then fell into the red yesterday but today the share price turned higher up 1.3% to $1.85. Rivals in the department store and retail space still lost ground, David Jones Limited (DJS) off 1% and Harvey Norman Holdings Limited (HVN) down 0.5% to $1.99.
Supermarkets, department stores, home improvement and office supplier, Wesfarmers Limited (WES) added 0.8% while rival Woolworths Limited (WOW) lost ground off 0.7% to $28.70.

The S&P/ASX 200 Financials index added 0.6%. Financial stocks listed small gains, with National Australia Bank (NAB) up by 0.3 to $25.36. Commonwealth Bank of Australia (CBA) up $0.03 to $55.05 and ANZ Banking Group (ANZ) added 0.17% and the best performer was Westpac Banking Corporation (WBC) up over 1.5% to $24.17. In the insurance space, AMP Limited (AMP), strong, up 1.37% in early trade to $4.47 and QBE Insurance Group Limited (QBE) also up over 1.3%.

The healthcare sector was out of favour this morning, as health and utility stocks are seen as safe havens in bad times and today the market it on an up-swing. S&P/ASX 200 Healthcare index was flat and the biopharmaceutical company CSL Limited (CSL) gave back 0.9% in early trade to $43.70. Bionic ear implant maker, Cochlear (COH) gained only 0.06% to $67.58. In the utilities sector, SP AusNet (SPN) gave back 0.75% and Australian Pipeline Trust and APT Investment firm APA (APA) lost $0.01 at $4.76. AGL Energy Limited (AGK) off 0.47%

Elsewhere, shares in Telstra (TLS) reversed yesterday's run off 0.78% to $3.82

Leighton Holdings Limited (LEI) announced it had won the contract to build the $154 million pedestrian link between Wynyard Station in Sydney's CBD to the western CBD and the multi-billion dollar waterfront development at Barangaroo. LEI share price listed a 2.73% gain in early trade to $15.34. Lend Lease Group regained yesterday's losses adding 2.6% to $7.87 and global pallet provider Brambles Limited (BXB) gained over 2%% to $6.96.

The Australian dollar is buying US105.68c and €0.8126.

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