Australian Stock Market Report – Midday7/27/2012

MIDDAY REPORT
(12.35pm AEST)

WOW! What a turnaround. The European markets rallied higher overnight on uplifting comments from the European Central Bank (EBC) President Mario Draghi. ECB´s Draghi said that the bank is ready to do ´´whatever it takes´´ to help support the euro. Now the next big item that the markets will be waiting out for is the ECB interest rate meeting on Thursday.

Overnight Spanish and Italian market lifted by around 6% and the UK market added 1.4%. In the US the excitement generated in Europe helped lift markets. The DOW Jones ended over 200pts higher and the NASDAQ up nearly 40 points. A great set of numbers from Exxon mobile helped lift energy stocks. Exxon reported a 49% lift in Quarterly profit to US$15.9Billion.

The local share market opened higher today, boosted by overseas movements and a lift in commodity prices. At the open of trade the All Ordinaries Index (XAO) was up 30 points. By lunchtime, the All Ordinaries Index (XAO) was up 33 points to 4,207. Mining stocks banks and industrial firms led the charge in morning trade.

Today the S&P/ASX 200 Energy sector gained 0.6% this morning. Big name mining stocks lead the sector higher. Oil Search Limited (OSH) and Santos Limited (STO) both up over 1%, with Woodside Petroleum Limited (WPL) added 0.4% in early trade to $33.10 and Origin Energy Limited (ORG) up 1.3%.

Our largest listed oil refiner, Caltex (CTX) was back in full-focus today. Yesterday Caltex announced plans to close its Kurnell plant in Sydney in the second half of 2014. CTX shares finished higher 1.4% yesterday, this morning Caltex share price fell over 2%, now down 1.5%, as investors reacted to concerns over the possible downgrade of Caltex's credit rating. After yesterday announcements, that the cost of converting the current facility into a world class import plant and redundencies will be around $680 million, the ratings agency S&P put Caltex's current BBB+ rating on credit watch negative.

The mining stocks were also strong in early trade the S&P/ASX 200 Materials sector up 0.97%. Rio Tinto Limited (RIO), one of the best performers, up 1.7% to $51.38. Fortescue Metals Group Ltd (FMG) up 1.25% $4.05 and Newcrest Mining Limited (NCM) up 3.53% to $23.16 and St Barbara Limited added 0.5% to $1.43, helped by the gold price hitting a 3 week high overnight.

G.U.D. Holdings Limited (GUD) reported that sales increased 3% to $609 million over the last year. GUD's underlying Net Profit after Tax (NPAT) of $44.1 million, down 10% to the end of July 2012 was expected by the market, even with the added proceeds of its Beville shareholding. The company is expecting continued weakness in its Davey water division and its consumer products division that includes: Sunbeam and Oates. On a more positive note GUD does see a lift in demand for its industrial and automotive businesses. GUD's full year dividend did increased 2% to $0.65 cents a share and the company announced a Special dividend of $0.35 cents per share. GUD share price fell over 3.7% in early trade to $8.53, a 2 week low.

Financial stocks were well supported, with the sector up 0.6pct. Shares in Westpac (WBC) gained 15 to 22.85 and Australia and New Zealand Banking Group Limited (ANZ) added 1.2% to $22.93. Macquarie Group (MQG) rose 2.2pct to finish at $24.40 and insurance stocks also higher. Suncorp Group Limited (SUN) added 1.7% to $8.38 and Insurance Australia Group Limited up 0.14% to $3.67.

Elsewhere, QR National Limited added 0.9% to $3.17 and Qantas Airways Limited (QAN) shares gave back some of the 9.6% gain from yesterday. QAN's share price came off 0.46% to $1.08. Rival Virgin Australia (VAH) today unchanged at $0.40.

Uranium producer Energy Resources of Australia Limited (ERA) shares down another 2% to 1.44 this morning after yesterday's weaker result. Yesterday's star stock Sirius Resources (SIR) added another 31% after it rose a whopping 690% in one day of trade on the news of a major nickel-copper discovery.

Mirvac Group (MGR) today announces that it has obtained planning approval for its landmark residential apartment development at Harold Park in NSW. Mirvac higher by 0.95%.

The Australian dollar is worth US104.12c, €84.75 and £0.6641.

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