Australian Stock Market Report – Midday November 6, 2014

A man is reflected as he walks past the Australian Securities Exchange building in central Sydney April 8, 2011. Singapore Exchange Ltd has terminated its $8 billion bid for Australia's ASX Ltd after the Australian government formally rejected the offer on national interest grounds and said changes to the country's financial systems were needed before the bourse could be bought by foreigners. REUTERS/Daniel Munoz (AUSTRALIA - Tags: BUSINESS POLITICS)

 After several sessions where a weaker tone had prevailed locally, early trade on Thursday saw buyers re-emerge to assert themselves once again in the Australian sharemarket. The improved tone was a reflection of the gains seen in Europe and the US overnight. In Europe the FTSEurofirst 300 index rose by 1.7%, the UK FTSE gained 1.3% and the German Dax lifted by 1.6% as investors showed no anxiety ahead of the European Central Bank meeting on Thursday which is seen as bringing news of fresh stimulus measures. US stocks were mixed, the Dow Jones and the S&P 500 index rose by around 0.5% while the Nasdaq ended marginally lower . The US ISM services index fell from 58.6 to 57.1 in October, short of estimates near 58.0. Elsewhere, the ADP survey of private employment showed that 230,000 jobs were created in October. The result was above estimates of 220,000 and boosted hopes for the Non Farm Payrolls data due on Friday.

 However, the early gains for the market ebbed over the course of the morning , mainly at the hands of the banks which dragged the market into negative territory. Westpac whose shares were down almost 1% a short time ago led the big 4 lower, although Bendigo and Adelaide Bank withstood the weakness with a gain of 0.5%

 Energy stocks enjoyed some buying support over the morning after oil prices lifted from multi-year lows in the last 12 hours. Helping oil prices recover was news that weekly US crude stocks rose by less than expected and in addition to reports of a pipeline blast in Saudi Arabia. Oil Search (OSH) was up 1.3%, Woodside Petroleum (WPL) was ahead by 0.4%.

 Elsewhere in the commodities space investors grappled with the iron ore price after prices fell by US$1.10 or 1.4% to a 5-year low of US$76.00 a tonne. There were varying experiences across the sector with the bulk miners Rio Tinto shares were up 0.3 %, Fortescue Metals Group (FMG) was down by 3.4% and Arrium (ARI) lost 2.3%.

 In company news. News Corporation (NWS) reported total first quarter revenues of $2.15 billion, a 4% increase compared to the same period last year which saw revenues of $2.07 billion. The bulk of the revenue growth was seen in the Book Publishing, Digital Real Estate Services and Digital Education businesses in addition to contribution from Harlequin after the recent acquisition in August of this year. These improvements were balanced by weaker advertising revenues at News and Information Services along with the sale of the Dow Jones Local Media Group last year. Underlying NPAT of $53 million, compared to $17 million in the prior year, was well ahead of market expectations which saw the shares up by almost 7 per cent at lunchtime.

 In economic news the ABS report a rise in job growth in October. Employment rose by 24,100 in October after falling by 23,700 in September. The consensus market forecast was for a 10,000 lift in jobs in the month. The rise in Full-time jobs was encouraging with an increase of 33,400, while part-time jobs fell by 9,400. The Jobless rate remained steady at 6.2 per cent in October. The participation rate rose from 64.5 per cent to 64.6 per cent. Employment in trend terms shows that employment is rising by around 2,000 a month with unemployment at 6.2 per cent. Elsewhere Hours worked rose by 1.6 per cent in October after falling by 1.2 per cent in August. Hours worked are up 1.2 per cent over the year. Whilst the job market still appears soft, the outlook is more favourable. The Aussie dollar spike above 86 US cents after the data was released , although the local unit returned to $US0.8570 soon after.

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