Australian Stock Market Report – Midday December 11, 2014

Traders work on the floor of the New York Stock Exchange July 17, 2014. U.S. stocks fell sharply lower on Thursday, with the S

 Australian shares are falling for the third straight with the ASX 200 Index down 0.6 per cent. The creation of close to three times as many jobs last month however is helping reduce the losses. At its worst levels, the local market was down by 1.35 per cent today.

 US markets slumped by around 1.5 per cent overnight while European markets continued this week's decline. Shares in Greece have fallen by 14 per cent in two days due to political concerns in the highly leveraged European economy.

 Energy stocks are leading the falls with the 4.5 per cent slump in the oil price overnight raising concerns of company profitability and pushing the sector down 1.9 per cent. The oil price has slumped by 17 per cent in a fortnight following OPEC maintaining its production quotas.

 Santos's (STO) 5 per cent slump today takes the losses this month to 28 per cent. The oil and gas producer said it will cut its capital expenditure by $700m to $2bn in 2015. It recently had its credit rate cut by Standard & Poor's and is focused on cutting costs in light of the weaker oil price.

 Caltex (CTX) is up 2.4 per cent and is one of the lone improvers in the energy sector. The oil refiner expects a 40 per cent jump in annual profit to between $450m-$470m thanks to higher sales.

 Telstra (TLS) is the biggest contributor to the ASX 200's gains with the telco rising by 1 per cent and taking the gains this year to 8 per cent.

 Volume at lunch is largely average with 723.2m shares traded worth $2.1bn. 240 stocks are up, 558 are down and 304 are unchanged.

 Employment lifted by a much better than expected 42,700 in November while the unemployment rate edged higher from 6.2 per cent to 6.3 per cent. Almost all the job gains were part-time positions with 40,800 jobs created while only 1,800 full-time positions were added. The market is now pricing in a 33 per cent change of a rate cut in February (was 39 per cent yesterday).

 The Australian dollar strengthened following the monthly jobs report and currently buys US$0.836, €0.670, ¥98.5 and £0.531.

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