Australian Stock Market Report – Midday June 25, 2014

MID-SESSION REPORT
(12.20pm AEST)

The Australian sharemarket is losing ground for the second straight day, with weakness across U.S markets and continued conflicts in Iraq and Ukraine keeping investors edgy. The All Ordinaries Index (XAO) is back below 5400pts, falling by 0.5 per cent at lunch.

The miners are the worst performers as the government's commodities forecaster; BREE has cut its iron ore estimates for 2015. It now expects the average iron ore price to be US$97 per tonne; 7.6 per cent below forecasts made just three months ago. Iron ore is Australia's biggest export and the impact of a 30 per cent slide in prices together with a firm Australian dollar is hurting the miners. BHP Billiton (BHP) is down 0.7 per cent while the smaller Rio Tinto (RI) is 0.76 per cent softer.

Treasury Wine Estates (TWE) is up 4.55 per cent despite announcing a $200 million write-down this morning. Interest from foreign investors in recent months has pushed TWE shares significantly higher. In May, the wine business turned down a $3.05 billion takeover bid from a U.S private equity firm; pushing TWE shares 36 per cent higher last month.

Shopping mall owner Westfield is also in focus due to a restructure. Westfield Corp (WFD) and Scentre (SCG) have both made their market debuts today. WFD will hold its better performing foreign assets while SCG will operate its Australian and New Zealand businesses.

The financials are down by around 0.5 per cent, with Westpac (WBC) the worst of the majors and is down 0.6 per cent.

The retailers are mixed, with two of yesterday's best performers - David Jones (DJS) and Country Road (CTY) unchanged. On Tuesday, South Africa's Woolworths confirmed its $213 million takeover offer for CTY which it already owns 87 per cent of. A condition of the deal is that the DJS acquisition also goes ahead. CTY rose by close to 20 per cent on Tuesday and DJS was up by around 4 per cent.

No major data is scheduled for release in Australia or the region today. Tonight, quarterly economic growth numbers in the U.S, manufacturing data and a report on durable goods orders will be in focus.

At lunch, 1.01 billion shares have changed hands worth $2.05 billion. 342 stocks are higher, 525 are lower and 388 are unchanged.

The Australian dollar is weaker, buying US93.6c.