Australian Stock Market Report – Midday July 23, 2014

A broker monitors the market from his booth during a trading session at Karachi Stock Exchange Reuters

After a solid session on Wall Street the Australian market opened higher. Our market boosted by positive quarterly numbers from BHP Billiton Limited (BHP) and money going back into the banking sector.

The ASX 200 back at 6year highs, but the market did lose a little ground after the 11.30 (AEST) released of the Consumer price index for the June quarter 2014. The fall was short lived and the markets power higher after noon.

By lunch the All Ordinaries Index was up 50 points
The banks and the retailers were higher in morning trade and the energy sector still stronger even with the US$ oil price falling back from US$105 a barrel at the close of trade yesterday to now be back below US$104/bl.

The materials sector higher boosted by BHP up over 1.6% after posting its stronger than expected full year iron ore results today BHP production lifted by 19% in the quarter and said it expects its FY15 production from the Pilbara region to exceed FY14. BHP said today it "expects underlying earnings before interest and tax in the six months ended June 30 to include one-time charges totalling as much as US$1.3Billion due to mine rehabilitation and the cost of jobs cuts. Rio Tinto Limited (RIO) was also stronger while Alumina Limited (AWC) up 5.02% and Lynas Corporation Limited (LYC) up over 11%.

Sandfire Resources (SFR) share price lifted by 0.3% by lunch after its quarterly production report. The volumes produced were slightly weaker than expected
For the full year 2014 SFR produced 67.700/tons of copper and 33.900 ounces of gold. Sandfire shares higher today on the news that its costs per pound was lower than the market had expected, with cash costs of US$1.18/lb.

Airline stocks around the globe came under pressure overnight on the news that that airlines had suspend flights into Israel´s Ben Gurion Airport, one of its largest, after rocket fire in the region and concern over flights in the area. But today our Qantas (QAN) share moved higher in early trade after the Sydney Morning Herald (SMH) ran a story stating Qantas was in talks and was considering splitting its domestic operations. QAN share price was up 1.6% to $1.27.

The headline CPI inflation read showed a lift of 0.5% over the June quarter and over the last year inflation has increased by 3.0%. While the underlying inflation number was higher than expected up by 0.8% taking the full year read to 2.9%. Over the last quarter there was a larger than expected rise in the cost of health and tobacco. Our view is that this was a tame read showing pricing pressures are under control and we expect interest rates to say on hold for some time.

After the June quarter inflation numbers were released the Australian dollar rallied higher and is now trading at 94.33 US cents, up from to 93.90 US cents before the data.