Australian Stock Market Report – Midday 12/13/13

Midv Session Report
(12:00 AEDT)

The Fed meeting next week looms as the last market catalyst for 2013. The better economic news from the US has improved the odds, in the markets eyes at least, that the US central bank will taper Q.E this year. As A result bond yields have risen and stocks have fallen in the last 24 hours. At lunchtime on Friday an uneasy equilibrium was in place after sellers attempted to further their argument for a 7th consecutive session in early trade. At its worst levels the ASX 200 was at a 15 point deficit; at lunchtime a small gain was in place. The question to be resolved this afternoon will be whether sellers reclaim the upper hand going in to the weekend.

At its AGM today Westpac (WBC) offered a sanguine note in its assessment of the Australian economy. The Chairman Lindsey Maxsted said the bank is "seeing welcome signs of improved consumer and business sentiment following the Federal election and the easing of the Australian dollar.´´ Additionally, Mr Maxsted indicated that "more interest is beginning to emerge from businesses as they think about investing again. This interest has yet to translate to real activity and new lending, but is a welcome sign.´´ As a result Westpac is cautiously optimistic, expecting a "modest pick-up in lending growth throughout this year. These trends support our positive view about the medium term outlook for the Australian economy.´´

Another talking point has been the RBA Governors views on the Aussie dollar. Speaking to the AFR, Mr Stephens said the Australian dollar's natural level would reasonably below its current rate, circa US 90 cents, particularly in the context of the rolling over of Australia's terms of trade. "I thought US85 cents would be closer to the mark than US95 cents, but really, I don't think we can be that precise". At lunchtime the currency was trading at US89.5 reflecting a surge in the US dollar after better economic news from the US overnight.

The gold price roller coaster continued overnight. The precious metal remained hostage to the US dollar, falling 2 per cent overnight as the Greenback rallied on better retail sales data. In the same way the ASX200 is within sight of key psychological levels around the 5000 mark; gold has come within view of the $US1, 200.00 mark a level that it last visited in June of this year. Gold stocks are mixed St Barbara (SBM) is down 3.5%, Newcrest (NCM) is down 0.1%

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