Australian Stock Market Report – Midday September 12, 2014

A trader works by the post where Verizon is traded on the floor of the New York Stock Exchange in this file photo taken February 21, 2014. Verizon Communications Inc, the largest U.S. wireless telecoms company, reported a 6 percent rise in quarterly revenue as its postpaid wireless subscriber additions rose 53 percent, July 22, 2014. REUTERS/Brendan McDermid/Files (UNITED STATES - Tags: BUSINESS)

Local stocks down for day number three

 The Australian sharemarket is falling for the third straight day and for the fourth time this week, with the All Ordinaries Index (XAO) down 0.4 per cent. Should nothing change dramatically this afternoon, this has been the worst week for local shares in a month. Last night a report showed there were more people filing for unemployment benefits in the US last week than expected. The DOW slipped by 0.1 per cent while the broader S&P500 ended modestly firmer.

 The miners are underperforming this month but have remained resilient this week, only slipping by 0.1 per cent. The energy sector is down 2.5 per cent this week, telcos down 1.2 per cent, consumer discretionary stocks have slumped by 2 per cent and consumer staples are down 1.8 per cent. Industry leaders like Woolworths (WOW) and CSL trading ex-dividend this week have been drags.

 Despite a fresh six-year low for the iron ore price, the mining sector is up 0.5 per cent at lunch. BHP Billiton (BHP) is up 0.6 per cent, Rio Tinto (RIO) is up 0.1 per cent and the smaller Fortescue Metals (FMG) is up 0.75 per cent. Higher cost producers like BC Iron (BCI) and Atlas Iron (AGO) are both down by around 0.5 per cent. Mining sector gains aside, all other industries are losing ground.

 The major banks are falling by as much as 0.6 per cent in what has been a disappointing week for the industry. The S&P/ASX 200 Financials Index (a measure of is down around 1.5 per cent this week.

 Australia's largest department store chain Myer (MYR) is down 6 per cent after a 13 per cent slump on Thursday. Yesterday, MYR posted a worse than expected 23 per cent slump in FY14 profit to $98.5m, flat sales, a 30 per cent drop in its dividend and new international entrants such as H&M are likely to make 2015 challenging. Five brokers have downgraded MYR today.

 Insurance company QBE is up 1.5 per cent and is adding to Thursday's 3 per cent surge. The prospect of higher US bond yields has been helping its shares rise. The market has been expecting the US central bank to raise its interest rate forecasts at its monthly meeting next week. Higher rates means more returns on QBE's US treasuries.

 At lunch, 1.09bn shares have been traded worth $1.99bn. 347 stocks are up, 467 are down and 334 are unchanged.

 The Australian dollar has fallen to a fresh six-month low of US90.6c. This is despite yesterday's stellar employment report with eight times more jobs created in August than expected by the market. Interestingly, Australians only need to be doing one hour of paid work per work to be considered employed in the monthly jobs statistics.

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