Australian Stock Market Report – Midday December 10, 2014

A man is reflected on a window of the Australian Securities Exchange building with a board showing the ten most heavily traded stocks for the day in central Sydney June 13, 2013. Australian shares earlier fell 1 percent to a fresh 5-1/2-month low as persistent concerns about central banks rolling back stimulus continued to take a toll on global equities. REUTERS/Daniel Munoz (AUSTRALIA - Tags: BUSINESS EMPLOYMENT)

 Wednesday has seen sellers continue to dictate terms for the ASX 200. The market started the session with a gain of 5 points, although positive territory was a fleeting experience and within the first quarter hour the index was down by 40 points. As lunchtime neared the market showed little evidence of consolidation as it continued to make new lows. The weaker tone locally reflected a similar experience in the US and Europe overnight. European shares fell to a two-week low overnight, led down by a slump in Greek stocks after an unexpected decision to bring forward the country's presidential election.

 European concerns centred on the strength of the anti-bail-out Syriza party. The Greek ATG stock index fell 12.8% - posting the biggest one-day fall since November 1987. The banking sector bore the brunt of the weakness. The stocks of peripheral economies also fell with Spain's IBEX down 3.2% and Italy's FTSE MIB down 2.8%. The FTSEurofirst 300 index was down by 2.3% with the German Dax also lower by 2.2% while the UK lost 2.1%. US sharemarkets were mixed on Tuesday but were well of session lows, supported by gains in tech and energy shares. The S&P energy sector gained 0.8% after losing 3.9% in the prior session. However political and growth concerns in Greece and the broader Euro zone dominated sentiment. At the close of trade, the Dow Jones was lower by 51 points or 0.3%, after being down by almost 220 points. The S&P 500 index closed flat while the Nasdaq gained 26 points or 0.5%.

 Locally, every sector measured by the ASX was in the red at lunchtime on Wednesday. Energy stocks remained the focus for sellers even though world oil prices rose for the first time in five sessions overnight. The gains reflected the perception that prices had reached more sustainable levels following the declines of recent weeks. Woodside Petroleum (WPL) was at $33.95 down 43 cents or 1.25%, Santos (STO) was firmer at $7.79 up 9 cents or 1.18% having fallen more than 20% this month.

 A weaker US dollar helped support a better tone for commodity prices in general. Gold was helped by the weaker greenback and safe-haven buying. The Comex gold futures price was up by US$37.10 an ounce or 3.1% to US$1,232.00 per ounce. Newcrest Mining (NCM) shares rose to $10.48 a gain of 20 cents or 1.95%. Alacer Gold (AQG) share were ahead to $2.65 a gain of 12 cents or 4.7%. Iron ore stocks were mixed as the materials sector battled to break into positive territory even though iron ore prices fell by US30c to US$69.40 a tonne on Tuesday. Fortescue Metals Group (FMG) was weaker at $2.44 a loss of 10 cents or 4.12%. Rio Tinto (RIO) enjoyed some buying support to trade at $55.99 a gain of 49 cents or 0.89%

 Consumer confidence figures added to the negative mood of the day. The Westpac - Melbourne Institute Consumer Sentiment Index fell by 5.7 per cent to 91.1 in December the lowest level since August 2011. The result overshadows the rise of 1.9 per cent seen in November. The survey revealed worrying implications for retailers ahead of the Christmas shopping period. The sub-index tracking assessments of 'time to buy a major household item' fell 11.8% from 124.2 to 109.6. It is now 21.4% below its level of a year ago and has reached its lowest level since April 2009. Elsewhere in the survey the index tracking assessments of 'time to buy a dwelling' fell 10.8% and is now down 19.3% over the year to the weakest level since November 2010. As a result retailers were noted underperformers Harvey Norman (HVN) shares were at $3.41 down 18 cents or 5.14% while Premier Investments (PMV) shares were at $10.17 down 51 cents or 4.7%.

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