Australian Stock Market Report

LUNCHTIME REPORT
(12.30pm AEST)

The Australian share market finished lower yesterday, with the All Ordinaries Index off by 21 points to 4409.2, after big slides in commodity prices out of Asia hitting mining and energy stocks. The weakness in commodity related firms continued to impact the overseas markets. The European markets held back by concern over the Euro turn-around story and how long it will take to occur, and lower than excepted business confidence out of Germany.

The US session was hit by global growth concerns, and book squaring for the end of the month and Quarter in the States. Lennar homes, one of the largest home builders in the US, reported a better than expected quarterly sales but the positive report overshadowed by broker downgrades for key Steel firms and other miners in the States and Canada.

At the open of trade today our market moved in to the red at the start of trade and more weakness crept into mining and energy stocks. And by lunch time the All Ordinaries Index was only off by 8 points to 4,401, as the weakness in banking and finance stocks abated.

The big news story this morning was the news that the forestry firm, Gunns Limited (GNS) has been placed into administration. Shares in Guns have not been trading since March the 9th since they were placed into a trading halt, last traded at $0.16, until the outcome of new refinancing talks. Unfortunatelly for the company; Gunns, staff and shareholders it failed to secure funds to keep the company viable. Gunns posted a loss for the Full Year 2012 of $903Million hit by large write-downs to its forestry unit and forced sale of investments.

The S&P/ASX 200 Materials sector was hit hard off nearly 1% by lunchtime after losses in base metals on the London Metals Exchange (LME) and yesterday's Asian slide in the price of gold and oil hit the markets. The Iron ore price gave back more ground off 2.5% to $103.70 a dry tonne. And even with a US$5 recovery in the Gold price in early Asian trade the mining sector was still weak. BHP Billiton (BHP), the world's largest mining company lost ground early on off 0.6% to $33.20. Rio Tinto (RIO) eased by 1.5% to $54.16. Australia's third biggest iron ore miner, Fortescue Metals (FMG) gave back 1.25% to $3.56. Mount Gibson Iron Limited (MGX) lost 3.6% to $0.80 and Atlas Iron Limited (AGO) off 3% to $1.45.5cents. Arrium Limited (ARI) off another 6.9% to $0.54, while BlueScope Steel Limited (BSL) higher up 2.5% to $0.40.

The industrial sector was hit hard yesterday with the transport stocks recovered today, in early trade off 0.04%, but the slides still continued in the mining service firms and mining material provider stocks, Bradken Limited (BKN) off 0.8% and Als Limited (ALQ) and Clough Limited (CLO) off another 2.6%. NRW Holdings Limited (NWH) share price fell over 2.5% early in trade to $2.19.

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 2% to $7.05. Caterpillar (CAT.NY) shares closed lower in US trade after the firm cut its expected long term earnings to $12 to $18/share in FY 2015, down from its prior guidance of $15 to $20 a share. The US management of Caterpillar were speaking at a mining conference in Los Vegas overnight, where they said they ´´sees modest global growth over the next few years...with China to recovery by year end.´´

The medical sector was one of the strongest areas of the market in early trade, but by lunchtime the medical stocks with large overseas exposure gave back gains. New wave medical firm pSivida Corp (PVA) which is involved in the development of miniaturised, injectable, drug delivery systems saw its share price hold steady this morning. pSivida announced financial results for its last quarter and full financial year today, showing a large slide in revenue in the last quarter $699Million from $3,715Million in the corresponding period. ResMed Inc. (RMD) moved higher up 2.13% to $3.84 while Mesoblast Limited (MSB) lost 2.8%.

Energy stocks also lost ground, even with a slight rise in the oil price in early morning Asian trade to US$ 92.30 a barrel, Woodside Petroleum Limited (WPL) off 0.88% to $33.70 and also down Santos Limited (STO) 0.8% to $11.34.

The S&P/ASX 200 Financial sector opened lower the major banks finished lower at lunch the big name banks had bounced back in line with gains in Asia. National Australia Bank (NAB) up slight to $25.61 while Westpac (WBC) made back 0.65% to $24.74, Australia and New Zealand Banking Group Limited (ANZ) added a few cents or 0.1% to $24.73 and Commonwealth Bank (CBA) edged higher by 0.364% to $55.43.
Insurers; Suncorp Group Limited (SUN) lost 1% and Insurance Australia Group Limited (IAG) also lower off 0.4% to $4.37. Today Suncorp group announced it plans to raise about $350 Million by issuing new preference shares and the funds from the raising will help improve its balance sheet. Finance firm, Challenger Limited (CGF) off 2.1% while property stocks rebounded, Stockland (SGP) up over 1.5% and Westfield Group (WES) lifted to $10.13.

The Aussie dollar regained some of yesterday's lost ground in early trade now buying US104.40c, £0.6431 and €80.63c.

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