Australian Stock Market Report – Midday September 18, 2014

Global Stock Market Indices — A pedestrian, holding his mobile phone, walks past an electronic board showing the stock market indices of various countries outside a brokerage in Tokyo August 6, 2014. Reuters/Yuya Shino

Local shares down for seventh day

 Despite a firmer start this morning, the Australian sharemarket is trading at its lowest level since 2 July at lunch. The All Ordinaries Index (XAO) is below the key 5400pt mark, is down for the seventh day and this is the worst week for local markets in 15 months. Volume iselevated partly due to index option expiry today which tends to result in a volume spike.

 Last night, US markets closed at record highs with the US central bank's commitment to keep rates low for longer supportive. The US dollar rallied however following the Federal Reserve increasing its forecasts for rates next year and 2016. European markets were mixed ahead of the Fed's meeting (which took place after European stocks closed) and the Scottish independence vote.

 The mining sector is the biggest drag on trade with the S&P/ASX 200 Materials index down 1 per cent. Commodity prices fell overnight including iron ore which is still close to five-year lows. BHP Billiton (BHP) is down 0.84 per cent, Rio Tinto (RIO) is down 1 per cent and Fortescue Metals (FMG) is 1.9 per cent lower. Iron ore and steel company Arrium (ARI) is down 26.1 per cent after resuming trade and being in the process of raising $754m. ARI has around

1.7 billion in debt. The falling ore price has made conditions difficult for the industry.

 The banks started positively but faded quickly as we approached lunch. The big four are now down by as much as 0.8 per cent. Financial stocks are falling for the seventh consecutive day and have slumped by 4.5 per cent so far in September.

 In the retail space luxury fashion group Oroton (ORL) is a standout after posting a 16 per cent rise in FY14 profit to $8.3 million. Revenue surged by 26 per cent to $124.9m. The Australian based retailer is up 9.8 per cent.

 At lunch, 1.26bn shares have been traded worth $3.29bn. 355 stocks are up, 458 are down and 322 stocks are unchanged.

 The Australian dollar has lost ground and currently buys US89.7c following the US central bank raising its interest rate forecasts for the next two years.

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