Australian Stock Market Report – Midday October 10, 2014

An office worker is reflected in the window of the Australian Securities Exchange building displaying the ASX50 curve for Wednesday in central Sydney August 7, 2013. Australian shares skidded 1.3 percent on Wednesday, its biggest fall in five weeks, hit by sharp falls in miners and financials as regional markets tracked a soft Wall Street lead amid uncertainty about the U.S. Federal Reserve's stimulus programme REUTERS/Daniel Munoz (AUSTRALIA - Tags: BUSINESS)

Second biggest fall of the year locally

 The local market is taking last night's tumble in the US seriously with Australian shares falling to an eight-month low. The All Ordinaries Index (XAO) is down 1.7 per cent, erasing all of Thursday's gains.

 Overnight US shares posted their fourth biggest declines of the year with the Dow falling by 2 per cent and the S&P500 slumping by 2.1 per cent. Concerns relating to economic growth continue to weigh on markets and in turn havepunished oil prices and energy stocks. US central bank officials overnight offered mixed commentary in relation to the likely date to raise rates.

 All sectors are firmly in the red at lunch in Australia, with the energy sector and miners the hardest hit. US oil prices fell by 1.8 per cent to a near two-year low overnight due to plentiful supplies and global growth concerns. Woodside Petroleum (WPL) is down 2.7 per cent while the smaller Santos (STO) is shedding 2.5 per cent.

 Iron ore fell by 0.4 per cent or $0.3 to US$79.5 per dry tonne and isn't too far above five-year lows. Australia's biggest iron ore miner Rio Tinto (RIO) is feeling the pain, sliding by 2.85 per cent at lunch. The country's biggest diversified miner and second biggest ore producer BHP Billiton (BHP) is trading at a 15 month low; down 2.2 per cent.

 The major banks are down by as much as 1.6 per cent, wiping out 20 pts from the All Ordinaries Index (XAO).

 Australia's biggest telco, Telstra (TLS) is slumping by 1.2 per cent and is yet to recover following trading ex-dividend at the end of August.

 Markets across the region are mostly softer with Japan's Nikkei 225 and South Korea's KOSPI down 1.15 per cent. Taiwan is closed for a holiday and markets in Hong Kong and China are yet to open.

 On the economic front, the number of new home loans granted to borrowers in August fell by a worse than expected 0.9 per cent. This makes it the biggest monthly pullback in loans since the end of 2013. The Australian dollar remains volatile, falling from A$0.888 yesterday to $0.876 at 12.30pm AEDT.

 At lunch, 997.7m shares have been traded worth $2.36bn. 145 stocks are up, 668 down and 288 unchanged.

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