Australian Stock Market Report - Midday November 4, 2014

Favourite Fiorente (front) runs to win the A$6 million ($5.7 million) Melbourne Cup at Flemington Racecourse in Melbourne November 5, 2013. Red Cadeaux was second with Mount Athos third in the 153rd running of the two-mile handicap, Australia's richest thoroughbred race. REUTERS/Brandon Malone (AUSTRALIA - Tags: SPORT HORSE RACING)

Stocks in a holding pattern ahead of Cup

 After a modest setback on Monday, the Australian share market has spent the early part of Melbourne Cup day 2014 moving higher in a restrained fashion. The flat start for the local market was a reasonable result in the face of weaker equity markets in the US and Europe. US investors were encouraged by figures showing the US ISM manufacturing index rose from 56.6 to 59.0 in October, above forecasts for a result near 56.2. European shares fell on Monday with investors disappointed by purchasing manager index readings. The Eurozone PMI rose only modestly from 50.3 to 50.6 in October.

 Early buying pulses over the initial hours of trade were contained by sellers and the index traded through a range of 16 points at the high and down 1 point at the lows for the ASX 200.

 One of features of the last 24 hours has been the continued weakness in energy markets. A number of factors contributed to the fall including a stronger greenback, making it more expensive for oil buyers in Europe and Asia. At the same time state-backed Saudi Arabian firm, ARAMCO, announced price cuts for US customers where the producer is facing increase competition from shale production. The news saw Brent crude fell by US$1.08 or 1.3% to US$84.78 a barrel while the US Nymex crude price fell by US$1.76 or 2.2% to US$78.78 a barrel. As a result local energy stocks were under pressure. Woodside Petroleum shares were down 0.5 % at $40.25.

 Retailers were being helped by the prospect of lower petrol prices for households in the wake of lower oil prices. According to the Australian Institute of Petroleum, the national average Australian price of petrol fell by 5.7 cents per litre to 143.9 cents a litre in the week to November 2 - the biggest weekly fall in five months. Another tailwind for the sector on Tuesday was the better than expected retail trade numbers for September. The ABS reported that retail sales rose 1.2 % in September, compared to rise of 0.1 % the previous month. The reading for the last month was well above estimates for a 0.3 per cent rise. Myer shares were ahead by 1.7 % , JB Hi Fi (JBH) was up 0.7%, Although Woolworths (WOW) shares were down 2.4 % , still held back by the weak sales numbers released by the grocer yesterday.

 Gold producers generally recovered from yesterday's falls although the yellow metal continues to run into headwinds easing to fresh 4-year lows in the last day. Comex gold futures ended down by US$1.80 an ounce or 0.2% to US$1,169.80 per ounce overnight. Newcrest Mining (NCM) was up by 2% , Alacer Gold (AQG) was up 1.8%

 In the last 24 hours the Aussie dollar has fallen from highs near US87.50 cents to lows near US86.45 cents and was near US86.85c in early afternoon trade ahead of the RBA decision on interest rates.

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