Australian Stock Market Report – Midday September 4, 2014

Local stocks trading at intraday lows

 Markets are softer at lunch, with the All Ordinaries Index (XAO) down 0.3 per cent. Despite the weakness local shares are still only 0.6 per cent below six-year highs. US markets finished mixed overnight, but the moves across all major American markets were modest.

 The mining sector is adding to last week's 1.2 per cent tumble by slipping 0.44 per cent over the first four days this week. The iron ore price fell overnight to a five-year low of US$85.7/dt. The ore price has fallen on 18 of the past 19 sessions and has slumped by 36 per cent this calendar year. BHP Billiton (BHP), which traded ex-dividend yesterday is continuing to remain weak, slipping by 0.33 per cent. Rio Tinto (RIO) is flat at $62.33 and iron ore miner Fortescue Metals (FMG) is bucking the trend, rising by 0.8 per cent after yesterday's 2.4 per cent slump.

 Online travel business Wotif.com (WTF) is down 5.98 per cent following the ACCC expressing its concerns with the $700m takeover by US travel giant Expedia. The consumer watchdog is under the impression the acquisition could lead to reduced competition and higher fees for consumers.

 The major banks are all falling by around 0.5 per cent and wiping out 5.5pts from the All Ordinaries Index which is down 18pts.

 The energy sector is only down modestly with Woodside (WPL) one of the worst hit. The price of US oil last night surged by almost 2.5 per cent following a weaker greenback. Moves in the US dollar can shift the purchasing power of both Asian and European buyers of the commodity.

 Today marks a pause in the ex-dividend season. Most of the big dividend payers have traded ex-dividend over the past fortnight including BHP Billiton (BHP), Commonwealth Bank (CBA), QBE Insurance (QBE), Wesfarmers (WES) and Woodside Petroleum (WPL). Falls from most of these businesses have been holding the market back.

 On the economic front, retail spending rose by 0.4 per cent in July as expected. Australia recorded a trade deficit of $1.36bn which was better than expected and tourist arrivals to Australia in July rose by 1 per cent.

 At lunch, 1.04bn shares have been traded so far worth $1.71bn. 410 stocks are up, 409 are in the red and 323 are unchanged.

 The Aussie dollar is stronger and buys US93.5c, €71.1c and £56.8p.

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