Australian Stock Market Report – Midday September 26, 2014

The song remains the same

 Friday morning saw a sadly familiar tale play out for the local share market once again. Selling arrived in another wave at the open after a grim session for stocks in Europe and the US overnight. European shares fell sharply on Thursday, hitting one-month lows in late trade. US share markets slumped led lower by a drop in Apple shares. Geopolitical concerns came to the fore after the Russian high court paved the way for the seizure of foreign assets. An ongoing theme was the rising US dollar which resulted in further weakness in commodity prices which undermined mining stocks on both the US and European continents.

 The ASX 200 fell by more than 1 per cent in the opening minutes of the session. Over the first half hour the market had shed 65 points, with sellers continuing to apply pressure which resulted in successive lows being put in place over ensuing hours. Another less than encouraging aspect of the opening stanza to the session was the elevated volume of transactions, highlighting the commitment of sellers. Once again mining stocks suffered close attention from sellers. The strength of the Greenback ensured that base metals and crude oil prices finished mostly lower in the last 12 hours. Further weight was added to commodity markets after orders for US durable goods fell substantially more than forecast in August. Iron ore prices have continued their downward trajectory in the last day. Prices have fallen to their lowest levels since the 3rd quarter of 2009 after a decline of 1.0% to USD78.60/t (CFR China). Rio Tinto (RIO) was the best improved bulk miner on Thursday. In early trade today the group was the worst decliner in that cohort with a fall of more than 2 per cent.

 In a more positive light, blood products group CSL appears on track to post a weekly improvement, notwithstanding the more than 1 per cent decline evident so far in the session. Investors continue to be guided by the positive outlook offered when the company reported results more than a month ago. At that time CSL CEO, Paul Perreault, highlighted that global demand for blood plasma products remained robust, despite the market being very competitive. More significant were company estimates of profit growth picking up by around 12% in the year ahead. In a week when the broader market is set to post a decline of almost 2 per cent, CSL shares are up by almost 1 per cent for the same period.

[Kick off your trading day with our newsletter]