Australian Stock Market Report – Midday September 16, 2014

Tony Abbott at New York Stock Exchange — Australia's Prime Minister Tony Abbott (L) rings the opening bell at the New York Stock Exchange June 10, 2014. REUTERS / BRENDAN MCDERMID REUTERS

Local shares down for fifth session

 The Australian sharemarket is modestly lower after recording its biggest daily slump in five weeks yesterday. The All Ordinaries Index (XAO) is down 0.1 per cent and continues to soften following disappointing signs for China's economy on Saturday.

 All sectors are losing ground at lunch with the recently underperforming mining industry the lone exception. The S&P/ASX 200 Materials Index is up 0.4 per cent following a 3.8 per cent surge in the ore price to US$85.2 per tonne. Despite the rise, the ore price (Australia's biggest export) is still down 35 per cent this calendar year. Smaller higher cost producers like BC Iron (BCI) and Atlas Iron (AGO) are among the better performers today. BCI is up 6.3 per cent and AGO is 3 per cent higher. BCI is still down 22 per cent in September so far. The larger BHP Billiton (BHP) and Rio Tinto (RIO) are both up by around 0.6 per cent. Both miners have been much more resilient than the rest of the industry thanks to their size and lower breakeven prices.

 The major banks are mixed, with Commonwealth Bank (CBA) and National (NAB) both up by 0.1 per cent while Westpac (WBC) and ANZ Banking (ANZ) are slightly softer.

 Australia's biggest telco, Telstra (TLS) is down 0.25 per cent; slipping for the fifth straight day. TLS has done well to remain strong despite trading ex-dividend on 27 August.

 Some of the biggest movers so far today have been Qantas (QAN) which is up 3.4 per cent, Pacific Brands which is down 2.5 per cent, Ramsay Health Care which is down 3.2 per cent.

 On the economic front, the Reserve Bank (RBA) Board minutes were released this morning. Australia's central bank maintains that "the most prudent course was likely to be a period of stability in rates". Essentially the RBA sees no reason in raising or cutting rates just yet. Keep in mind that the RBA met at the start of September, before the release of health data on employment, economic growth and retail spending.

 At lunch, 946.6m shares have been traded worth $2.06bn. 352 stocks are up, 464 are down and 317 are unchanged.

 Major markets are trading normally today internationally. A holiday in Malaysia is keeping its market closed however.

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