Australian Stock Market Report – Midday 8/7/2012

LUNCHTIME REPORT
(1pm AEST)

On Monday the Australian share market kick started the trading week on a positive note with the All Ordinaries Index (XAO) is up 49.7points, finishing at a new 12 week high.

Overnight European and US markets closed stronger and commodity prices also gained.

This morning the local market opened higher up 6 points as investors bought into mining and energy stocks and out of the healthcare and retail sectors.
By lunchtime The All Ordinaries Index (XAO) added 16 points or 0.38% to 4,309.

The best performing sector this morning was the S&P/ASX 200 Energy Sector up 1%. The energy sector was helped by the lift in the US oil price overnight, with oil now sitting at a 2 week high back above US$92 a barrel. Oil Search Limited (OSH) one of the weaker big name energy players today unchanged at $7.09 while Santos Limited (STO) added 1.71% to $10.97. Woodside Petroleum Limited (WPL) gained 0.94% in early trade to $34.37 and Origin Energy Limited (ORG) only slightly higher, up 0.1%.

Base metals prices rose in London on Monday night in response to the positive US employment data from Friday and news that the German Government was willing to agree to the new bond negotiations in place by the European Central Bank (ECB). Index leader BHP Billiton (BHP) rose 0.8% to $32.27 while iron ore miner Fortescue Metals Group (FMG) added another 1.4% still helped by yesterday's news the firm had secured US$1.5billion in funding to expand its flagship iron ore facility in Western Australia's Pilbara region. Rio Tinto (RIO) our second largest listed mining firm is due to report its full year results on Wednesday, ahead of the report RIO added another 1.2% to $54.82.

The S&P/ASX 200 Financials sector was slightly higher this morning, only by 0.5%, the big 4 banks a little quiet today ahead of the reserve banks of Australia's (RBA) August interest rate decision due out at 2.30pm (AEST) today. Commonwealth Bank of Australia (CBA) up 0.6% to $56.75 and Australia and New Zealand Banking Group Limited (ANZ) added 0.5% while Westpac Banking Corporation (WBC) also added 0.68% to $23.61. Insurance and property stocks also mixed with the best performer being Suncorp Group Limited (SUN) up 1.26% to $8.66 with QBE Insurance Group Limited (QBE) also higher.

In the industrial sector, industrial equipment maker, Bradken limited (BKN) also reported its Full Year result today. Bradken showed its profit increased by 49% over the year as demand grew for its core products that it provides for the resource companies across the world. Bradken share price rallied 9.1% by lunchtime to $5.63.

Toll road operator Transurban Group (TCL) has halved its annual earnings, due to a write-down on one of its motorways in the US. Net profit for the 12 months to June 30 came in at $58.6 million, down 50.4% on the 2011 result. The result includes a $138.1 million charge on its Pocahontas 895 toll road in the US state of Virginia. Statutory toll revenue for the year came in at $765.4 million, up 5.7% on the previous year´s result. The company will pay shareholders a final dividend of $0.15c a share, taking total payments to 29.5c. The dividend will be payable on the 14th August 2012. TCL shares fell over 3% in early trade but by lunchtime were only down 1.7% to $5.92.

Hearing implant maker Cochlear (COH) released of its Full Year earnings this morning. Bionic ear maker today reported a huge drop in annual earnings, due to costs associated with a product recall in September. Net profit after tax including the $101.3 million recall cost, came in at $56.8 million for the 12 months to June 2012, down 68% from earnings of $180.1 million in the previous financial year. NPAT excluding the recall expenses was $158.1 million, only a little lower than the $160M figure analysts had predicted. COH shares off 4.25% to $63.55.

Elsewhere, Telstra Corporation Limited (TLS) fell over 0.4% this morning Telstra set to report later this week saw its share price hit $4.05 by lunchtime. Qantas Airways Limited (QAN) up 3.15% and energy provider, AGL Energy Limited (AGK) off 0.03%.

The Aussie dollar is buying US105.88c, £0.6790 and €85.36c.

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