Australian Stock Market Report – Midday July 2, 2014

A train hauling carriages filled with iron ore is seen on the outskirts of Port Hedland in the Pilbara region of Western Australia in this December 3, 2013 file photo. If Australian miners are worried about the dramatic decline in iron ore prices, it doesn't show. At an annual gathering of many of the world's biggest and smallest iron ore producers here the mood is upbeat - as if the heftiest one-day fall in ore prices since the global financial crisis never happened. REUTERS/David Gray/Files REUTERS/David Gray/Files

MID-SESSION REPORT
(1215pm AEST)

The Australian sharemarket is improving for the first time in three days, with fresh record highs in the U.S. and a firmer iron ore price helping. The All Ordinaries Index (XAO) is 0.9 per cent higher, making it the best day for local shares in a fortnight.

All sectors are higher, with the miners, industrials and consumer staples the strongest movers. The iron ore price rose by 0.4 per cent overnight to US$94 per tonne, which is helping lift the miners by as much as 1.7 per cent at lunch. Expectations over the next year for ore prices (Australia's leading export) are only for a slight improvement on average from here.

The financial industry, which is the biggest sector on the local market, is surging by 1.1 per cent. National Australia Bank (NAB) is up 1.7 per cent, leading the other majors higher.

The defensives are rising by not as impressively as the broader market. Telstra (TLS) is up 0.77 per cent while the healthcare industry is 0.8 per cent.

On the economic front, Australia recorded a worse than forecasts $1.9 billion trade deficit in May. Over the month, exports fell by 5 per cent while imports eased by just 1 per cent. A $780 million deficit was posted in April. The Australian dollar fell following the numbers and currently buys US94.5c. Better than expected Chinese manufacturing numbers on Tuesday helped lift the Aussie to a seven-month high overnight.

Tonight, a report on private sector jobs will be in focus at 10.15pm (AEST) in the form of an ADP employment report. Just over 200,000 jobs are expected to have been added in June.

Looking ahead, Thursday will be the busiest of the week locally with no fewer than four reports/events in focus. A monthly read on the number of building approvals granted to developers by councils, retail spending statistics, a speech by a Reserve Bank official and two economic reports out of China will be key. Arguably the most important piece of data will be released on Thursday night in the U.S. The monthly non-farm payrolls report (data on U.S. employment) is likely to set the tone for local stocks on Friday. The market expects the