Australian Stock Market Report – Midday June 19, 2014

MID-SESSION REPORT
(12.10pm AEST)

The Australian sharemarket has broken a two day losing streak, helped by fresh record highs in US markets. The All Ordinaries Index (XAO) is up 0.9 per cent, making it the best day for local shares in over two months.

Comments by the Federal Reserve (North America's central bank) that interest rates are likely to remain low for longer to support the US economy has boosted markets. American markets have doubled in value over the past five years. As expected, the Federal Reserve has reduced its monthly stimulus by US$10 billion to US$35 billion and has cut its growth forecasts for 2014 and the long-term.

All sectors are firmer at lunch, with the exception of the slightly softer property trusts. The mining industry is up 2.1 per cent and continues to make up for last week's 2.7 per cent tumble. The price of iron ore rose 1.1 per cent, helping lift the ore producers at lunch. BHP Billiton (BHP) is up by 2.7 per cent while Rio Tinto (RIO) is up 2.1 per cent.

Energy stocks are higher despite mixed oil prices overnight. Australia's second largest oil and gas producer, Woodside (WPL) is up 1.45 per cent and is leading the sector higher. Yesterday however, WPL slumped by 4.5 per cent as its largest shareholder, Shell sold down a large portion of its stake. A lack of growth projects in the pipeline for WPL has concerned some investors.

In the retail space, JB Hi-Fi (JBH) is up 0.88 per cent as it reaffirmed its annual profit expectations. The discount retailer expects an 8.3 per cent to 10.8 per cent lift in earnings to $126-$129 million. It does expect sales to be lower than previous estimates though. JBH has announced that at the end of this month, current CEO Terry Smart will hand over the leadership reigns to CFO, Richard Murray.

On the economic front, a quarterly update on population growth, the RBA Bulletin and detailed labour market data are highlights. Australia's population has grown by 405,000 over the 12 months to September 2012. The RBA Bulletin includes topical articles on the economy and is available to the public on the Reserve Bank's website.

At lunch, 1.24 billion shares have changed hands worth $4.11 billion. Index option expiry day today is one reason why volume is greater than usual. 497 stocks are higher, 324 are in the red and 380 are flat.