Australian Stock Market Report – Midday January 13, 2015

People work at the West Qurna oilfield in southern Basra October 13, 2014. Oil prices are hovering just above $90 per barrel, a level last seen in June 2012, putting a strong spotlight on OPEC producing countries. They face calls to cut output at, or before, a policy meeting in late November to prop prices up as some are already feeling the pinch of sub-$100 oil through increased budget pressure. Global oil prices are collectively reflecting the sweeping impact of a U.S. shale oil boom, with its production consistently outstripping growth forecasts. REUTERS/Essam Al-Sudani (IRAQ - Tags - Tags: BUSINESS ENERGY)

 Australian shares are falling for the second day with a falling oil price holding back mining and energy sectors most. The ASX 200 Index is down 0.7 per cent following Monday's 0.8 per cent tumble.

 US shares closed lower overnight with investors cautious ahead of the December quarter earnings season. After the closing bell this morning the largest American aluminium producer, Alcoa posted better than expected profit results. Alcoa (AA;us) expects demand for the metal to grow by 7 per cent in 2015 and consumption in China to expand by 10 per cent.

 Energy stocks are down by 2 per cent and are the biggest drags following a 4.7 per cent slump in the oil price overnight. The energy industry has shed 8 per cent of its value so far this month while oil prices have fallen by 55 per cent in just six months.

 Airlines have been positively impacted by falling oil prices recently but both Qantas (QAN) and Virgin Australia (VAH) are largely flat at lunch. QAN shares have surged by 120 per cent over the past year while VAH is up by a less impressive 12 per cent.

 Telstra (TLS) is a standout and is up 0.3 per cent to be only 1c below its 13.5 year high of $6.07 which was hit on two occasions in the past week.

 Energy Resources (ERA) is down 3.8 per cent despite a 19 per cent rise in December quarter production. Investors are uninspired following a radioactive leak at a NT processing plant 12 months ago which interrupted production. ERA shares have lost 93 per cent of their value since Japan's natural disaster in 2009 and the subsequent pullback in global demand.

 Australian consumers are more confident with their finances according the results of a weekly survey this morning. Petrol prices are at their most affordable levels in four years which is likely to be boosting confidence. The average Australian household is saving around $45/month on petrol compared to just 12 months ago.

 Volume remains light with 752.5m shares traded worth $1.5bn. 304 stocks are up, 468 down and 250 are flat.

 The Australian dollar buys US$0.816, €0.689, £0.537 and ¥96.1.

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