Australian Stock Market Report – Midday July 4, 2014

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

MID-SESSION REPORT
(12pm AEST)

The Australian sharemarket is rising for the third straight day thanks to better than expected economic news last night. The All Ordinaries Index (XAO) is up 0.6 per cent, is trading above 5500pts for the first time in a month and almost all sectors are higher. If the market can hold onto the gains for the remainder of the session, this is set to be the best week in 4.5 month for local shares.

The most important employment report of the month was released in the U.S. last night, which helped push markets and the greenback higher. There were 288,000 jobs created in June; around 75,000 more than forecast. The unemployment rate has also eased to 6.1 per cent, which marks the lowest rate since September 2008.

The miners are mostly firmer, with the iron ore price improving overnight. So far, July is the first month since November last year that the ore price is rising. Australia's largest miner, BHP Billiton (BHP) is up 1.1 per cent, Fortescue Metals (FMG) is 1.62 per cent higher while Rio Tinto (RIO) is up 0.3 per cent.

The improving banks are contributing close to 10pts to the broader market's 30pt rise at lunch. National Australia Bank (NAB) is the standout, rising by 1.4 per cent. The other three majors are up between 0.3 per cent and 0.7 per cent.

The retailers are coming under some selling pressure with Harvey Norman (HVN) down 1.6 per cent, surfwear retailer Billabong (BBG) down 2 per cent and department store owner David Jones easing by 0.25 per cent. Retail spending fell for the second straight month according to a report released by the Bureau of Statistics yesterday.

At lunch, only 980.6 million shares have been traded, worth just $1.71 billion due partly to the Independence Day holiday in the U.S tonight. 537 stocks are higher, 282 are in the red and 275 are unchanged.

The Australian dollar is weaker at US93.5. Positive signs for the U.S. economy last night together with comments from the Reserve Bank Governor Glenn Stevens yesterday are contributing factors.

A public holiday in the U.S tonight is likely to keep markets globally relatively quiet day. No major economic news is scheduled for release today locally or across the region.