Australian Stock Market Report – Midday 9/26/13

Commsec Mid-Session Report.
(12:00 AEST)

The resolve of yesterday's buyers has been tested today in early trade on Thursday. Similar circumstances to Wednesday were in place at the open of trade after US stocks ended lower for a 5th day on the trot. The declines for US indices weren't sinister, although the related statistics were less than encouraging, for example the SP 500 finished at the lows of the day; more importantly the index settled below the 1700 mark. As a result the local market saw selling from the outset, at its worst levels the ASX200 was down by 0.5%. Although as we approached lunchtime buyers were beginning to make an impression with the initial losses being halved.

An encouraging aspect of morning trade has been the improving volume. Turnover was approaching $1.5bln as the market moved off the lows of the session. This result dovetails favourably with yesterday's volume picture which hints at an increased willingness on the part of investors to engage with prices at elevated levels despite headwind being created by Wall St.

It's been un-surprising to see energy stocks underperform after oil prices fell for a 5th consecutive session overnight. An easing of supply constraints is the main factor here. Whilst the geopolitical conversation has improved; the Iranian foreign minister has boosted hopes for talks with Western nations on Iran´s nuclear program, supply from Iraq and Libya has lifted. Key oil fields in Libya particularly are coming back online after recent disruptions.

In stock specific news. Warrnambool Cheese and Butter Factory (WCB) recommended shareholders reject Bega Cheese Ltd.'s (BGA) takeover offer. The group offered the standard line that Bega´s offer is inadequate, highly conditional, and uncertain and does not reflect fair value. The offer Bega has on the table entails 1.2 Bega shares and $2.00 cash for each WCB share. At present Bega owns 18 per cent of WCB.

Elsewhere, the Federal Court has dismissed an application by the Northern Inland Council for the Environment who were seeking an injunction to stop the commencement of construction works at Whitehaven Coal's (WHC) Maules Creek project. WHC said coal production remains on target for the first quarter of calendar year 2015. WHC shares were up 0.75% a short time ago.

[Kick off your trading day with our newsletter]