Australian Stock Market Report – Midday 11/12/2012

MID-SESSION REPORT
(12.30pm AEDT)

The Australian sharemarket kicked off the new trading week in the red, with the All Ordinaries Index (XAO) down by as much as 0.3 per cent within the first half an hour of trade. From 11.30am (AEDT) onwards however; the XAO has managed to stage a recovery and is now largely flat. The local market has lost ground for three straight weeks.

The energy, mining and industrial sectors are all trading in the red. BHP Billiton (BHP) is easing by 0.32 per cent or 11 cents to $34.34 while the smaller Rio Tinto (RIO) is up 0.09 per cent or 5 cents to $58.74.

The big banks were mostly weaker in early trade; however are now all improving. Westpac (WBC) is up 1.11 per cent or 28 cents to $25.45, National Bank (NAB) and ANZ Banking Group (ANZ) are around 0.4 per cent higher while Commonwealth Bank of Australia (CBA) is gaining by 0.24 per cent.

QBE Insurance (QBE) is one of the worst performers so far in trade, with a drop in expected profit margins announced this morning from 12 per cent down to 8 per cent. QBE's losses from Superstorm Sandy could also hit as much as US$450 million (between US$350 million to US$450 million). Total damage from the storm is currently expected to be around US$20 billion. QBE shares are down 5.83 per cent or 75 cents to $12.12.

Orica (ORI), the manufacturer of specialty chemicals and mining services is down 3.56 per cent or 89 cents to $24.11 after announcing a 37 per cent fall in full-year profit to $402 million (down from $642 million in the previous year).

On the economic front, a report has shown that Australians have picked up their borrowing to purchase homes for the second straight month. Housing finance rose by 0.9 per cent, which was broadly in-line with expectations. Credit and debit card spending trend numbers are also out today. Mid-week, we'll find out if wages are rising while a report on consumer confidence will also be issued on Wednesday. This is based on a survey of around 1,200 consumers Australia-wide.

In the region, at 10.50am (AEDT) we found out that the Japanese economy contracted by a slightly worse than expected 0.9 per cent in the previous quarter. No major economic news is expected across Asia Pacific over the coming days.

In Europe, the main focus will be on Eurozone economic growth (GDP) readings mid-week which is likely to show a slight contraction in the European economy. The Italian economy is expected to have contracted; France is forecast to be flat while Germany's economy is likely to have grown by a very modest 0.1 per cent according to the market.

In the U.S, the fiscal cliff will remain in the spotlight. American officials are running out of time to find solutions on how to reduce the nation's budget deficit. If no answers are found, automatic spending cuts and tax increases will be triggered at the start of 2013. This could very likely result in a U.S recession. That aside, minutes from the U.S central bank, consumer confidence and retail sales will all be issued this week.

Following the start of daylight savings, major Asian markets will be trading between the hours mentioned until April next year.

The Hong Kong sharemarket trades in two sessions each day and will now open for trade between 12.30pm (AEDT) and 3pm (AEDT) while the second session is between 4pm (AEDT) and 7pm (AEDT).

Out of Japan, the first session will be between 11am (AEDT) and 1pm (AEDT) while the second session is between 2.30pm (AEDT) and 5pm (AEDT).

The Singapore exchange will be open for trade between 12pm (AEDT) and (AEDT) 3.30pm (AEDT) for the first session and then between 5pm and 8pm (AEDT) for the second.

U.S futures are currently pointing to a slightly better start to trade tonight. The U.S market trades between 1.30am (AEDT) and 8am (AEDT).

So far in trade at lunch, 719 million shares have been traded worth $1.76 billion. 361 shares are up, 385 are lower and 346 are currently unchanged.

The Australian dollar (AUD) is stronger and buys US104.1 cents, €81.8 cents and £65.5 pence.

The AUD is the world's fifth most traded currency behind the U.S dollar, the Euro, Japanese Yen and British Pound. The AUD accounts for around 7 pct of all foreign exchange trades.

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