Australian Stock Market Report – Midday 9/26/2012

LUNCHTIME REPORT
(12.30pm AEST)

Yesterday the Australian share market lost ground for the second day in a row, with the All Ordinaries Index (XAO) off by another 13 points to 4,395 points. It was a day of 2 half for both the European and US markets. After strong economic numbers out in early US trade, showing US consumer confidence lifted to a 7 month high and better than expected housing data, key European markets pushed aside early global growth concerns and tracked higher. The US markets opened stronger but then fell away sharply into the close as negative comments from one of the, non-voting, members for the Federal Reserve (FED RES) hit the screens. After the FED RES Bank of Philadelphia President Charles Plosser said the central bank's latest round of monetary easing was unlikely to help growth. This exacerbated the slides in the market with the Dow ending 101 points lower.

At the open of trade today our market moved straight into the red as more weakness crept into mining and energy stocks. By lunch time the All Ordinaries Index was only off by 15 points to 4,380, as the weakness in banking and finance stocks abated but the slides in mining stocks increased. The overnight slide in hte aussie dollar helped reduce the losses on larger miners and building material stocks in morning trade.

The S&P/ASX 200 Materials sector was hit hard off nearly 1.2% by lunchtime. Overnight global growth concerns pushed gold oil and iron ore lower while base metals on the London Metals Exchange (LME) gained across the board. The Gold price gave back more ground in early Asian trade to US$1,763 an ounce. Our largest listed gold producers Newcrest Mining Limited (NCM) continued to slide off 0.8% to $27.54 and Regis Resources Limited (RRL) off 1.45% to $5.38.

The broader metal market also fell, BHP Billiton (BHP), off another 1.6% to $32.72. Rio Tinto (RIO) eased by 2.5% to $52.62. Australia's third biggest iron ore miner, Fortescue Metals (FMG) gave back 0.85% to $3.49. Mount Gibson Iron Limited (MGX) lost 4.4% to $0.75 and Atlas Iron Limited (AGO) off 1.7% to $1.41. Arrium Limited (ARI) off another 2.8% to $0.52.5cents, while BlueScope Steel Limited (BSL) continued its solid run, slightly higher up 0.6%.

Yesterday Lynas Corp (LYN), the rare metal miner and refiner received more bad news on its Malaysian refining project news it had been once again delayed and the stocks fell over 8%. This morning after the company issued its Full Year results late last night the stocks has continued to slide off another 5.66% to $0.75, as concerns mount over its debt position and future goals to get its Malaysian project back on track. Lynas reported "a realised a loss before tax of $97,879 thousand (2011: $57,288 thousand)" and said it was now having to renegotiate is credit lines. Dow Jones Wire Service reported that Lynas has "Renegotiated its debt covenants with Japan´s Sojitz" but the company is yet to confirm this to the markets.

The industrial sector was hit hard over the last few days and even with the slide in the US oil price the transport sector is weak again today. Qantas Airways Limited (QAN) off 2.78% to $1.22 while Alliance Aviation Services Limited (AQZ) off 6.8% to $2.05. Slides still continued in the mining service firms and mining material provider stocks, Bradken Limited (BKN) off 1.75% and Als Limited (ALQ) off 0.7% with Clough Limited (CLO) holding steady today. NRW Holdings Limited (NWH) share price fell another 0.5% early in trade to $2.19. Ausdrill Limited (ASL) off 3.67% to $2.89 after going ex-dividend today. 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 another 0.6% to just below $7 a share.

The medical sector was one of the strongest areas of the market in early trade with Ramsay Health Care Limited (RHC) added another 1.9% to $23.70. ResMed Inc. (RMD) moved higher up 1.8% to $3.91 while Mesoblast Limited (MSB) added 0.3%.

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 1.16% to $33.38 and also down Santos Limited (STO) 0.9% to $11.30 and uranium stocks also lower, Paladin Energy Limited (PDN) off 3% to $1.28 and New Hope Corporation Limited (NHC) off 1.55% to $4.46.

Banking stocks continued yesterday´s weakness and insurers were also hit.

The Aussie dollar lost ground at the close of the US session overnight and continued to fall in early trade now buying US103.65c and €80.29c.

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