Australian Stock Market Report – Midday January 14, 2015

An investor wipes his face as he stands in the Australian Securities Exchange in front of boards displaying stock prices in central Sydney October 16, 2014. Australian shares slid 1.1 percent on Thursday after U.S. stocks lost ground as investors continued to fret about global growth, though a recovery among gold producers prevented steeper losses. REUTERS/David Gray (AUSTRALIA - Tags: BUSINESS)

 Australian shares are losing ground for the third day in what has been a volatile start to the session. The ASX 200 Index is down 0.1 per cent with weaker commodity prices and softer US markets not helping.

 Energy stocks are interestingly today's standouts despite the price of oil falling to a near six-year low. Oil and gas companies have slumped by 6 per cent this month.

 Santos (STO) is an outperformer after chief executive David Knox flagged the possibility of asset sales to relieve pressure from weaker oil prices. Woodside Petroleum (WPL) is up 0.6 per cent.

 Mining shares are slumping most with the price of iron ore down 0.9 per cent to US$67.9/tonne. Pure iron ore play Fortescue Metals (FMG) is down 5.5 per cent while BHP Billiton (BHP) and Rio Tinto (RIO) are down around 1.2 per cent.

 Whitehaven Coal (WHC) is up 3 per cent despite posting a 17 per cent slump in December quarter production and a 7 per cent slide in sales. WHC expects difficult conditions to continue and its shares are still down by 13.5 per cent this month.

 Production reports will be in focus over the next fortnight ahead of the February earnings season. WPL issues its production report tomorrow while RIO and BHP are out next Tuesday and Wednesday respectively.

 Commodity price weakness is making conditions challenging for miners. BHP generates almost all its earnings from the sale of iron ore, petroleum and copper products. Iron ore prices have halved in value over the past 12 months, oil is at a near six-year low and copper is at a five year low.

 Total lending (housing, business, personal and lease loans) fell by 1.9 per cent in November. The number of job vacancies across the economy in November rose by 2.6 per cent to 150,400 - a two-year high.

 Volume remains light with 619.2m shares traded worth $1.6bn. 338 stocks are up, 366 are down and 282 are unchanged.

 The Australian dollar buys US$0.817, €0.694, ¥96.2 and £0.538.

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