Australian Stock Market Report

LUNCHTIME REPORT
(1pm AEST)

After a strong close on the Australian share market on Friday, with the All Ordinaries Index (XAO) adding 11 points to 4, 430 points European market rallied. European index's up near 1% driven by gains in on news that Spain is heading closer to asking for an official bailout. This would be not great for global growth or the Eurozone recovery story, but at least we would know where we all stand.

But the UK market, the London FTSE, slipped into the red as weaker banking stocks and global growth concerns crept in after The World Trade Organisation revised down its expectations for world trade to grow by 2.5% this year and tips 4.5% growth in 2013.
The US session was hit by global growth concerns, and a pullback in banking stocks. On a bright note - KB Home (KBH) one of the largest luxury home builders in the states reported a better than expected quarterly sales report as demand for housing increased. KB shares jumped more than 16%.

For the Aussie market today the market opened lower than expected off 16 points with falls in miners, insurers and energy stocks and by lunch time the All Ordinaries Index (XAO) had given back more ground and was off 26 points to 4, 403 points with Shanghai and Japan also lower.

The S&P/ASX 200 Materials sector was hit hard off 1.4% by lunchtime after gains in base metals on the London Metals Exchange (LME) and a rise in gold and oil on Friday night. The Iron ore price did give back a little bit of ground off 2.5% to $106.40 a dry tonne. BHP Billiton (BHP), the world's largest mining company lost ground early on off 1% to $33.36. The smaller Rio Tinto (RIO) eased by 2.3% to $55.00. Rumours are still circulation in the markets but so far there has been no confirmation from RIO that it plans to cut jobs at its Kestrel longwall and Clermont coal mines in the Bowen Basin, QLD. Australia's third biggest iron ore miner, Fortescue Metals (FMG) gave back 0.5% to $3.59. Mount Gibson Iron Limited (MGX) lost 2.35% to $0.83 and Atlas Iron Limited (AGO) off 3.8% to $1.51.

The industrial sector was also hit in early trade off 0.89%, with large slides in mining service firms and mining material providers, such as Bradken Limited (BKN) off 1.9% and Boart Longyear Limited (BLY) off 0.3% to $1.60.

The reason for the new weakness in mining service stocks was an announcement from contractor NRW Holdings Limited (NWH) that its revenue would be impact by a pull-back in BHP's Port Headland port plans. NRW said the planned contract over work, the scope, within the inner harbor at Port Hedland that services the in Pilbara iron ore region had been scaled back by around $75 to $80 Million. NWH's share price fell over 5% early in trade and by lunch was down 41.5% to $2.23. Service firms AJ Lucas Group Limited (AJL) lost over 1.8% to $0.79.5cents and Macmahon Holdings Limited (MAH) down again off another 1.6% by lunch. Seven Group Holdings Limited (SVW); the owners of WesTrac Group, the wholly owned Caterpillar distribution subsidiary providing services in Australia s resurgent mining industry, fell over 3.2%.

Energy stocks also lost ground, even with a slight rise in the oil price on Friday and US$ oil now holding at US$ 91.95 a barrel, Woodside Petroleum Limited (WPL) off 1% to $33.78 and also down 1% to $11.37.

The S&P/ASX 200 Financial sector opened lower the major banks finished lower at lunch but the insurers were hit harder. National Australia Bank (NAB) was the best performer of the big 4 up slight to $25.44 while Westpac (WBC) gave back 0.28% to $24.55, ANZ Banking Group (ANZ) off 0.24% and Commonwealth Bank (CBA) edged lower off by 0.3% to $54.98. Insurers; Suncorp Group Limited (SUN) lost 0.96% and Insurance Australia Group Limited (IAG) also lower off 0.45% to $4.39.

On Friday the retail sector moved back in focus with the better than expected result from Premier Investments (PMV) the owners of the Just Jeans, Peter Alexander and Smiggle. Premier shares ended 8% higher at $5.60. Today the shares rebounded adding 1.96% to $5.71. Surfwear retailer, Billabong (BBG) also in the spot light after one of its 2 takeover bidders pulled out late last week putting a lot of pressure on the firm. BBG shares fell another 1.47% this morning to $1.34. Also in the retail space Myer Holdings Limited (MYR) share price shown ex-dividend today off 4.93% or 0.0925cents lower and David Jones Limited (DJS) off 1.68% to $2.34.

There was no planned major economic data to be released in the region, but the Federal Government surprising the market with the final release of the 32011/12 budget. The federal budget came in better than expected with a smaller than expected deficit for the 2012/13 financial year. The final underlying cash deficit was $43.7 Billion better than the $44.4 Billion expected (the projected numbers from the May budget) and an improvement on the $47.7 Billion deficit for 2010/11. The total revenue from tax receipts was lower over the year and for June the outlay from the government was greatly increased due to funds for the upfront compensation payment for the carbon tax and school education payments.

The Aussie dollar lost ground in early trade now buying US104.13c, £0.6427 and €80.50c.

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