Australian Stock Market Report – Midday 1/20/14

MID-SESSION REPORT
(12.30pm AEDT)

The Australian sharemarket is losing ground following a mixed and uninspiring session from global markets on Friday. The main potential driver of local stocks this afternoon is likely to be a barrage of Chinese economic readings at 1pm (AEDT). Volume is expected to be on the light side globally, with the Martin Luther King Jr holiday keeping U.S. markets closed tonight.

One of the standout stocks at lunch is Paladin Energy (PDN), which is 3.1 per cent firmer and improving for the fifth straight session. PDN said it has agreed to sell a 25 per cent stake in its Langer Heinrich uranium mine in Namibia for US$190 million to China's state owned, China National Nuclear Corp. This provides the Australian uranium miner with much need cash and potentially side-steps the need for a capital raising. PDN and many other uranium miners have struggled since the Japanese nuclear disaster which occurred in March 2011. PDN has slumped by 89 per cent over the past three years.

Gold miners are surging following a rise in the value of the precious metal on Friday. Australia's biggest gold miner, Newcrest Mining (NCM) is up 5.2 per cent while iron ore focused Rio Tinto (RIO) is up by just 0.1 per cent after coming off a solid week.

The major banks are all in the red; putting the All Ordinaries Index under pressure. The four big banks account for around a third of the Australian sharemarket. National Australia Bank (NAB) is down 1.2 per cent, while ANZ Banking Group (ANZ) is 1.1 per cent lower.

According to a report, inflation rose by a greater than expected 0.7 per cent in December. This makes it the biggest monthly rise in three years - partly driven by food and petrol prices together with a falling Australian dollar. The more important quarterly read on CPI (consumer inflation) will be out this Wednesday and is likely to show that prices rose by around 2.3 per cent over the past year.

The Australian dollar is hovering around a 3.5 year low against the greenback at US87.7 cents. Our currency has been pushed lower by worse than expected U.S. and Australian job numbers out over the past fortnight.

At lunch, 837 million shares have changed hands, worth $1.58 billion. 379 stocks are higher, 404 are in the red and 294 are unchanged.

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