Australian Stock Market Report – Midday September 19, 2014

Stock market yawning investor — An investor yawns in front of an electronic board showing stock information at a brokerage house in Hangzhou, Zhejiang province June 19, 2014. China shares had their biggest daily losses in more than seven weeks on Thursday, as the diversion of a sizable amount of capital for initial public offerings continued to weigh on markets. REUTERS/Stringer

Sellers Fatigue

 There was some evidence of sellers fatigue in early trade on Friday. Buyers were able to get some purchase helped by the fact that ASX 200 has lost 2 per cent so far this week, bringing the losses for the month to 3.5 per cent.

 Financials were the reason the index was able to consolidate in positive territory with varying degrees of support seen for the big four banks who have generally shed in the range of 5 per cent over the month of September. The NAB was the best improved of the group on Friday morning with a gain of more than 1 per cent as evidence mounted that the Scottish 'no vote was gaining momentum. A successful vote for Scottish independence could have created further uncertainty for the NAB's UK banking operations where the group owns Glasgow-based

Clydesdale Bank.

 Support for the materials sector continued to wane in early trade. There were some headwinds created by weaker commodity prices overnight. Base metal prices fell by up to 1.3% on the LME, with the exception of tin which rose 0.5%. Lead fell by 1.3% and copper was down 1.2%. Gold prices fell to an eight month low and Iron ore fell by US$1.20 or 1.4% to US$83 a tonne. Steel maker and iron ore producer Arrium (ARI) remained under pressure after yesterday's rights issue led to a fall of 29 per cent, the biggest decline in the company's history since it was spun out BHP. ARI shares have lost a further 3 per cent on Friday.

 Canadian gold miner Alacer (AQG) has rejected a takeover bid from OceanaGold (OGC) who confirmed that it had made several representations to AQG since February. OceanaGold is listed in Australia & Canada and operates two mines in New Zealand in addition to one in the Philippines. AQG has one mine and several exploration projects in Turkey and is listed in Canada, although Chess Depository receipts trade on the ASX. Shares in AQG jumped 18.5 cents, or more than 9 per cent, to $2.11 at lunch. At the same time OGC was up six cents to $2.62.

 The Australian dollar has lost ground again in late morning trade. The local unit hit fresh six-month lows after the release of a statement from the US central bank on Thursday on suggestions the US could have more interest rate hikes next year. At Midday (AEST), the local currency was trading at US89.45c, down from US89.57c on Thursday.

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