Australian Stock Market Report – Midday August 15, 2014

Local shares up for 4th time this week

 The Australian sharemarket is up for the fourth time this week, with the All Ordinaries Index (XAO) rising by 0.25 per cent. This takes the gains so far this week to 2.3 per cent; the best week in six months and completely making up for last week's 2.1 per cent slump.

 Most global markets finished a touch firmer overnight despite mixed economic readings. There were more Americans filing for unemployment benefits than expected last week and economic growth in Europe remains sluggish to non-existent. The 18 nations belonging to the euro area/euro zone recorded no growth in the past three months while the 28 countries of the European Union grew by just 0.2 per cent.

 At lunch only the mining and energy sectors are modestly weaker while all other industries are high. Gold stocks are under pressure, most commodities eased overnight and the price of iron ore is sitting close to an eight-week low. BHP Billiton (BHP), Rio Tinto (RIO and Fortescue Metals (FMG) are still managing to post some improvements following Thursday's losses. BHP, RIO and FMG are Australia's biggest iron ore producers. Building materials company James Hardie (JHX) is down 7.2 per cent after recording an 80 per cent slump in its quarterly profit to $28.9m following currency movements and continued asbestos compensation. JHX also lowered its FY14 profit guidance.

 Three of the four major banks are improving by as much as 0.75 per cent with the exception of ANZ Banking Group (ANZ) which recorded a worse than expected quarterly profit result. Third quarter earnings of $1.69bn fell short of consensus with markets income a drag. Its Net Interest Margin - which is the profit banks make on their loans was also a little weaker. ANZ recorded a $5.2 billion cash profit for the nine months between September 2013 and June 2014.

 Telstra is up 0.72 per cent and is trading at a fresh 13-year high of $5.61. Australia's largest telco posted a better than expected $4.27 billion net profit on Thursday, a higher dividend and a $1 billion buyback.

 The Australian dollar is firmer and buys US93.1c.

 Markets in the region are mixed, with shares in Japan, Taiwan and the Philippines losing ground. Shares in Hong Kong and China are firmer and the South Korean market is closed for a holiday.

 Tonight, the second estimate of quarterly GDP will be released in the UK at 6.30pm (AEST). In the US, business inflation, industrial production and consumer confidence will be issued.

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