Australian Stock Market Report – Midday June 17, 2014

A train hauling carriages filled with iron ore is seen on the outskirts of Port Hedland in the Pilbara region of Western Australia in this December 3, 2013 file photo. If Australian miners are worried about the dramatic decline in iron ore prices, it doesn't show. At an annual gathering of many of the world's biggest and smallest iron ore producers here the mood is upbeat - as if the heftiest one-day fall in ore prices since the global financial crisis never happened. REUTERS/David Gray/Files REUTERS/David Gray/Files

MID-SESSION REPORT
(12.30pm AEST)

All of Monday's improvements have been wiped out after two hours of trade this morning. Continued iron ore weakness, geopolitical concerns in Iraq and Russia together with a downgrade for US growth estimates are some of the major drivers. The All Ordinaries Index (XAO) is down 0.15 per cent, with the mining and energy sectors the worst performers.

The price of oil was largely flat overnight; however surged by 4 per cent last week partly due to violence in Iraq. The energy sector was one of the few improvers last week. Australia's second biggest oil and gas producer Woodside Petroleum (WPL) is in a trading halt today as it announced the purchase of over 78 million shares (9.5 per cent of the company) from Shell at a discounted price of $36.49. Shell is WPL's biggest shareholder.

The price of iron ore fell below US$90 per tonne last night for the first time since September 2012. Excess supply in China and a slowing Chinese property market are two of the drivers. The weaker ore price is squeezing profit margins for global producers of the metal. Rio Tinto (RIO) and BHP Billiton (BHP) are down 0.8 per cent at lunch.

The retailers are mostly firmer, with the latest weekly ANZ/Roy Morgan survey results on consumer confidence rising 1 per cent. Myer (MYR) is up 0.75 per cent while surfwear retailer Billabong (BBG) is up 3.5 per cent. 13.4 million shares have been traded in David Jones (DJS) at $3.90 ahead of an investor meeting on South Africa's Woolworths' bid.

Today is one of the busier days for economic news locally, with the results of a weekly consumer confidence survey, RBA Board minutes, data on car sales and a quarterly publication on agricultural commodities issued. The highlight though is the RBA's latest board meeting minutes. Comments suggest that Australia's central bank is in no rush to lift interest rates. This has pushed the Australian dollar from US93.8c to US93.6c.

At lunch, 974.3 million shares have changed hands worth $1.78 billion. 389 stocks are higher, 414 are in the red while 363 are unchanged.

Tonight, the US Fed's two day meeting kicks off. American inflation and housing data will also be in focus.