Australian Stock Market Report – Midday 9/20/2012

LUNCHTIME REPORT
(12.15pm AEST)

Local stocks have come off the four month highs reached yesterday, as investors await Chinese manufacturing data coming through later this afternoon. The Australian share market rallied in afternoon trade yesterday after the Bank of Japan announced it would extend its asset buying program to 80 Trillion Yen. US and European markets also surged on the efforts to stimulate Japan's economy and tackle its deflation concerns. At lunchtime in the East, the All Ordinaries Index (XAO) is down.

Mining and energy stocks are the biggest drag, after the oil price fell overnight to US$91.98 a barrel. Index leader BHP Billiton (BHP) shares are down 1pct to $33.90 while Rio Tinto (RIO) is also off 1pct to $57.23. Fortescue Metals Group (FMG), which has seen its share price rise by 23pct this week after securing a US$4.5 billion credit facility, is down 2pct to $3.62 in the early session today. The iron ore price fell to US$109.50 a tonne.

Surf-wear retailer Billabong International (BBG) has seen its share price fall by 7.3pct to $1.34 after its second takeover suitor walked away from its bid for the company. The $1.45 per share offer from private equity firm TPG remains. BBG has repeatedly said this offer undervalues the true value of its company.

Investors are moving back into upmarket retailer David Jones (DJS), which fell yesterday after reporting a near 40pct in Full Year earnings. DJS shares are up 3.3pct in early trade to $2.335.

The Australian dollar remains generally well supported against the major currencies and at 12.15pm AEST is buying US104.58c, £0.6445 and €80.23c.

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