Australian Stock Market Report – Midday January 12, 2015

A man is reflected as he walks 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 (AUSTRALIA - Tags: BUSINESS POLITICS)

 Australian shares have kicked off the trading week in the red following the best gains of the year on Friday. The ASX 200 Index is down 0.4 per cent with all sectors losing ground. This follows global sharemarket weakness and a drop in commodity prices.

 US shares failed to receive a boost from a better than expected American employment report. 252,000 jobs were added in December (10,000 more than forecast), while the jobless rate improved from 5.8 per cent to 5.6 per cent. Close to 3 million jobs were added over 2014 - the strongest year of job gains since 1999. Despite this seemingly great outcome there are still issues relating to stagnant wages, a shrinking workforce and underemployment.

 Energy stocks are being hit hardest following another 1 per cent fall in the oil price on Friday. Woodside Petroleum (WPL) is down 1.2 per cent while Santos (STO) is sliding by 3.2 per cent. Junior energy companies like Drillsearch, Karoon Gas, Horizon Oil and Sundance have all received broker downgrades and have had target prices cut.

 Mining shares are also coming under significant selling pressure with the price of iron ore down 1.1 per cent while base metals are also weaker. Gold stocks are surging however following a firmer gold price which has received some support this calendar year. Newcrest Mining (NCM) is up 3 per cent today and has surged by 15 per cent this year.

 Fairfax Media (FXJ) is up 4 per cent at lunch. The media group said it will pay $72m to acquire the rest of Victoria-based Metro Media Publishing Holdings. Metro holds interests in 15 weekly real estate and lifestyle magazines and papers and owns www.reviewproperty.com.au. FXJ continues to expand its Domain real estate business.

 On the economic front, the number of new home loans issued in November fell by 0.7 per cent while job advertisements have jumped for the seventh straight month.

 Volume remains light with 521.2m shares traded worth $965.9m. 330 stocks are up, 400 are down and 308 are unchanged.

 The Australian dollar is firmer and buys US$0.822, €0.693, ¥97.2 and £0.542.

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