Australian Stock Market Report

LUNCHTIME REPORT
(1pm AEST)

The Australian market opened a little weaker than expected today The All Ordinaries Index (XAO) rose by 10 points but by lunchtime it had lost a bit of ground and was only up 8 points to 4,418 points.

After the strong close on Wall Street, Commodity markets and Europe we did expect a better day here at home.

The US markets, closed higher still helped by the outcome of the US Federal Reserve's new Quantitative Easing (QE) program. But the weaker than expected US Industrial output, falling by 1.2% over the last month, its fastest rate for three years hit industrial stocks in the US and could be influencing out industrial sector today.

The best performing sectors in morning trade were the materials and financials. The S&P/ASX 200 Materials index added another 1.4% in early trade. The sector moved higher after base metals markets lifted and the US$ spot iron ore price turned higher, up 5.4% to US$101.60 a dry tonne. Rio Tinto (RIO) added 1.7% in early trade to $57.59 and our largest listed miner BHP Billiton limited (BHP) up over 2.4% to $34.10. One of the standouts in the material space yesterday Iluka Resources Limited (ILU) added another 7.18% to $11.04. The steel stocks managed to move higher today with Arrium Limited (ARI- the old - Onesteel) up0.33% while BlueScope Steel Limited (BSL) lost ground giving back 1.28% to $0.38.5cents.

Fortescue Metals Group Limited (FMG) shares were placed into a trading halt before the start of trade on Friday. FMG shares have fallen over 45% since July after losing 14% last Thursday to close at $2.99, well off its all-time high of $14.99 cents on the 21st of September 1990. 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.

The US dollar gold price closed at a 7 month high on Friday night and has added another US$5 an ounce in early Asian trade to US$1,778 an ounce. The platinum share price also rose again on Friday, up 2%, as staff strikes in South Africa continue. Newcrest Mining Limited (NCM) added 1.9% to $28.90 and Alacer Gold Corp. (AQG) up 0.4% to $6.83 with St Barbara Limited (SBM) up 2% to $2.02. OceanaGold Corporation (OGC) up3.8% to $3.01.

Today the retail sector was weaker in morning trade. Myer Holdings (MYR)share price fell into the red off 1% to $1.83. Rivals in the department store and retail space still lost ground, David Jones Limited (DJS) off 2.17%, ahead of its Full Year result release on Thursday, and Harvey Norman Holdings Limited (HVN) down 0.6% to $1.97.75c.

The S&P/ASX 200 Consumer Discretionary sector fell by 0.58% in early trade. The supermarket, department stores, home improvement and office supplier, Wesfarmers Limited (WES) fell 0.35% while rival Woolworths Limited (WOW) lost more ground off 1% to $28.52 and Metcash Limited (MTS) off 1.65% to $3.58.

The S&P/ASX 200 Financials index added 0.6%. Financial stocks listed small gains, with National Australia Bank (NAB) up by 0.6% to $25.58. Commonwealth Bank of Australia (CBA) up $0.14 to $55.42 and ANZ Banking Group (ANZ) added 0.47% and Westpac Banking Corporation (WBC) up over 0.8% to $24.31. In the insurance space, AMP Limited (AMP), strong, up 0.7% in early trade to $4.48 and QBE Insurance Group Limited (QBE) also up over 0.25%.

The healthcare sector was out of favour again 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 2.9% in early trade to $42.23. Bionic ear implant maker, Cochlear (COH) gained only 1.3% to $66.42.

In the utilities sector, SP AusNet (SPN) gave back 0.25% and Australian Pipeline Trust and APT Investment firm APA (APA) lost $0.06 or 1.2% at $4.72. AGL Energy Limited (AGK) off 2.04% to $14.41.

Elsewhere, shares in Telstra (TLS) came off 0.52% to $3.8o and Telecom Corporation of New Zealand Limited (TEL) also lower of nearly 5% and Ainsworth Game Technology Limited off 6.7% to $2.27c.

Leighton Holdings Limited (LEI) today advised the market that its Victorian desalination plant had successfully produced drinking water during the first test phase. LEI share price listed a 5.75% gain in early trade to $16.63. Lend Lease Group lifted by 0.64% to $7.83 and global pallet provider Brambles Limited (BXB) fell over 33.8% to $6.78.

The Australian dollar is buying US105.40c and €0.8013.

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