Australian Stock Market Report – Midday June 12, 2014

MID-SESSION REPORT
(12.10pm AEST)

The Australian sharemarket is easing for the second day, with worse than expected job statistics, global market weakness and a World Bank forecast dragging stocks lower. The All Ordinaries Index (XAO) is down 0.5 per cent, with only the utilities managing to rise slightly at lunch.

At 11.30am (AEST), the Bureau of Statistics released the May jobs report. 4,800 jobs were lost last month, which fell short of the market's expectations. 27,000 part time jobs were lost while 22,200 full time positions managed to be created. The unemployment rate has remained steady at 5.8 per cent. Despite the worse than forecast headline reading, there still have been around 100,000 jobs added since the start of this calendar year.

The mining sector continues to struggle due to commodity price weakness and a firm Australian dollar. Three of the biggest companies in the sector - BHP Billiton (BHP), Rio Tinto (RIO) and Fortescue Metals (FMG) have been the biggest drags. These three miners alone make up around half of the whole sector in Australia. The nickel price slumped by 2.6 per cent overnight, dragging Western Areas (WSA) 1.9 per cent lower at lunch.

The price of iron ore has continued to slip overnight to US$93.5/t, which is almost 10 per cent lower than just four weeks ago. Oversupply concerns and less than stellar Chinese economic news are not helping. While BHP and RIO are both slightly lower at lunch, FMG is slumping by 3.8 per cent. The pure iron ore play (meaning all it does is mine ore) has plummeted by close to 25 per cent since the start of January 2014.

The major banks are all down by as much as 0.6 per cent after a few hours of trade. The four big banks account for more than 25 per cent of the whole Australian sharemarket. The financial sector is still up 4.6 per cent this calendar year; outperforming the broader market.

In the healthcare space, Ramsay Healthcare (RHC) is up 2.6 per cent. On Wednesday, the private hospital operator announced plans to acquire 83.4 per cent of France's biggest private hospital company Générale de Santé. RHC's France operations account for around 40 per cent of the group's total revenue.

At lunch, 812.2m shares have been traded worth $1.65bn. 335 stocks are up, 492 are in the red and 356 are unchanged.

Globally, New Zealand's central bank decided to lift rates from 3 per cent to 3.25 per cent as expected this morning. The NZX50 Index is up 0.06 per cent. Tonight, no major data is scheduled for release in Europe. In the U.S. a monthly retail spending report is due for May together with weekly jobless claim numbers. This report gives economists a sense of how many Americans filed for unemployment benefits for the first time in the previous week.

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