Australian Stock Market Report – Midday June 18, 2014

MID-SESSION REPORT
(12pm AEST)

The Australian sharemarket has been modestly lower for the second consecutive session for most of the morning. A 1.5 per cent slump from the energy sector and weakness from the banks are holding stocks back most. The All Ordinaries Index (XAO) is now largely flat with the index off by just 0.2pts.

It was an uninspiring session for global markets overnight, with investors treading water ahead of the Federal Reserve's monetary policy decision and press conference which will be held after 4am (AEST) Thursday morning. America's central bank is expected to wind back its bond buying program by another US$10 billion per month.

The energy sector is slumping as Woodside Petroleum (WPL) slides by 3.6 per cent after resuming trade. Shell, WPL's largest shareholder sold down its stake in the energy giant from 24.5 per cent to 13.6 per cent. It is expected to sell another 78.3 million shares in WPL at a discount. Some investors have been concerned at the lack of its growth projects following the collapse of the Leviathan project off the coast of Israel

The retailers are mostly firmer, with JB Hi-Fi (JBH) up 2.7 per cent while Harvey Norman (HVN) and Myer (MYR) both are up around 1.5 per cent. David Jones (DJS) is modestly higher as shareholders of South Africa's Woolworths agreed that raising money to purchase the department store owner is a good idea. DJS shareholders will be meeting on 30 June to discuss how to proceed with the deal. Businessman Solomon Lew has increased his stake in DJS to close to 10 per cent in recent days.

The miners are a little higher, with Rio Tinto (RIO) up 0.9 per cent and BHP Billiton (BHP) up 0.1 per cent. The major banks are mixed, with Commonwealth Bank (CBA) up 0.1 per cent, while Westpac (WBC), National Bank (NAB) and ANZ Banking Group (ANZ) are all slightly lower.

No major economic data is scheduled for release in Australia today; however the latest home price report will be issued in China. Recent signs of a slowing Chinese property market has been a contributing factor to the slipping iron ore price. Iron ore is used to make steel; a critical part of the construction process. Japan, our second biggest trading partner issues trade data and minutes from the Bank of Japan's most recent monetary policy meeting.

At lunch, 762.1 million shares have changed hands worth $5.51 billion. Equity Derivatives Options expiry is tomorrow. This tends to result in a volume spike.