Australian Stock Market Report – Midday December 19, 2014

IN PHOTO: Office workers are reflected as they walk past the Australian Securities Exchange building in central Sydney April 8, 2011. Singapore Exchange Ltd has terminated its $8 billion bid for Australia's ASX Ltd after the Australian government formally rejected the offer on national interest grounds and said changes to the country's financial systems were needed before the bourse could be bought by foreigners. REUTERS/Daniel Munoz

 Australian shares are improving for the third day after six straight sessions of weakness. The ASX 200 Index is up 1.3 per cent with the underperforming energy industry this morning's best performer.

 US markets had their best day of the year overnight, surging by more than 2 per cent. Equities have received a boost following signs the US central bank will be patient in lifting interest rates.

 Energy stocks have brushed aside a 4 per cent slump in the oil price to a fresh 5.5 year low. The price of oil has now almost halved in value since June this year. While this is good news for consumers with lower fuel costs increasing disposable income; oil and gas companies have slumped by 25 per cent over 12 weeks.

 Incitec Pivot (IPL) is up 2.7 per cent ahead of its Annual General Meeting. The fertiliser and explosives business isn't immune to the recent oil price slump however; as oil and fertiliser prices are correlated.

 Flight Centre (FLT) is up 2.8 per cent today following yesterday's 9 per cent slump due to a profit guidance downgrade. Australia's largest travel agent said it will be "...difficult for the company to achieve its initial target of a full year underlying profit of $395m - $405m" due to difficult trading conditions.

 Sydney Airport (SYD) is up 2.5 per cent following a 1.5 per cent rise in passenger numbers over the 11 months to November 2014. International passengers rose by 2.2 per cent while domestic visitors edged higher by a less substantial 1.3 per cent.

 SYD's Chief Executive Kerrie Mather said that "Chinese (+24.8%), Filipino (+21.5%), Taiwanese (+8.7%), Indian (+7.7%) and USA (+6.3%) nationality passengers grew particularly strongly in November. Australian residents travelling to the Philippines increased 56.4% during the month as new services from Philippine carriers Cebu Pacific Air and Philippine Airlines provide greater access to popular destinations with their respective networks. Cebu increased its capacity further on 10 December by adding a fifth weekly frequency to Manila. Australians travelling to New Zealand also increased strongly at 5.9%."

 No major economic news is due for release today locally.

 Volume is much heavier than usual with 736.1m shares traded worth $4.8bn. 502 stocks are up, 239 are down and 249 are unchanged. Both equity index and individual equity derivatives expired yesterday which has boosted volumes.

 The Australian dollar buys US$0.816, €0.664, ¥97.1, £0.521.

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