Australian Stock Market Report - Midday 9/25/13

Mid-session report
(12:00 AEST)

The ASX200 has started in strong fashion in Wednesday ignoring the weakness seen in the US overnight. The initial setup for local trade was less than optimistic after the Dow closed around the worst levels if its session.

One of the highlights of early trade has been the solid participation. At midday around $1.5bln shares had changed hands, a substantial improvement on recent days. To see the market move higher on improving volumes would certainly provide encouragement for the bulls, particularly after a succession of falls for the index.

The majority of sectors are trading higher. Banks are being well supported. A case is being made that the big four are once again attracting some foreign buying as US interest rates fall in the wake of the Feds commitment to continued Q.E. The NAB was the best improver amongst the big 4. Although the big lenders are being matched by gains for their regional peers. Bank of Queensland shares are up by more than 1.5%.

Miners are generally higher despite falls for base metals overnight. Iron ore prices firmed slightly although the more meaningful aspect of its price action remains its consolidation at elevated levels. It's for this reason that FMG is substantially higher than its counterparts BHP and RIO. Additionally FMG has been given a fillip on recent news that Andrew Forrest has been a buyer of stock, taking his stake in the miner to 33%.

For a second day retailers have seen better news. David Jones full year results have been released. The main points include; FY profit after tax (excluding $9.1m impact of Dick Smith transaction) of $101.6m compared to consensus expectations of $97.4m (Bloomberg; 13 analysts, range A$91.1m-A$105m). Sales of $1.85 billion (Bloomberg; est. $1.86b, 14 analysts). The Final dividend of 7 cents compared to estimates of 6.5 cents. Improved margins suggest that the discounting cycle for retailers in general is in the process of bottoming. There were no surprises in the outlook; the group says trading conditions will remain challenging over next 12 months with consumer sentiment continuing to be subdued and ongoing competitive pressures.