MIDDAY REPORT (1pm AEDT)
Yesterday, The Australian Stock market closed lower with The
All Ordinaries Index (XAO) falling by around 50points.
Today the market reopened lower, following the lead of major
markets around the globe overnight. Key European and U.S. market
index's off around 1pct. As end of year book squaring and
European debt concerns scared investors. Book squaring is where
investors sell out of shares, gold and other assets to lock in
the profit or loss they have made during a set period. Book
squaring usually occurs at the end of months, quarters, financial
years and calendar terms.
At lunchtime The All Ordinaries Index (XAO) had fallen by
44.5points to 4,096.5points, just off a 2 month low.
The S&P/ASX 200 Materials index off 1.5pct after base
metal prices on the London Metals Exchange (LME) fell overnight.
Australia's second largest resource company, RIO Tinto (
) slumped by 0.73 pct or 44 cents to $60.08 while the larger BHP
) dropped 0.90 pct or 30 cents to $34.27. BHP today confirmed
that the route planned to be used for shipments of toxic waste
from its Olympic Dam project would be safe, after a train
derailment on Tuesday in Central Australia. The train was
carrying copper concentrate owned by OZ Minerals Limited (OZL)
and OZ shares are off 4.80pct or 50 cents to $9.91.
Gold producers lost more ground today as profit taking hit the
gold price overnight. Newcrest Mining Limited (NCM), Australia's
largest listed gold miner, off 3.15pct to $29.78. St Barbara
) of another 0.77% or 1.5 cents. Gold came off another US$30 an
ounce overnight now holding at US$1,556 an ounce in Asian
The S&P/ASX 200 Consumer Discretionary sector
(discretionary retailers) still under pressure after last week's
slide. Department store owner Myer (MYR) continued to fall this
morning hitting a new listing price low of $1.92 now holding at
$1.93 off 1pct and rival David Jones (DJS) is down 0.42 pct or 1
cents to $2.37. Other companies in the retail space are mixed
today Harvey Norman (HVN) slightly higher up 0.28pct or 5 cents
to $1.81 while discount retailer JB Hi-Fi (JBH) share are 1.35
pct lower at $11.20.
The S&P/ASX 200 Financials index doing a little better than
other areas of the market only down 0.5%. The four major banks
all lower with Westpac (
) the best performer only off 0.2 pct or 4 cents to $20.09.
National Australia Bank (NAB) off 0.5 pct, Commonwealth Bank of
) off another 0.6 pct to $49.01 and ANZ Banking Group (ANZ) eased
by just over 1 pct to $20.52.
The insurers are one of the best performing sub sectors today
after big fall yesterday. Insurers came under pressure yesterday
on concerns over how large and how many claims would be entered
from the storm damage in Melbourne over the Christmas long
weekend. We still do not have any firm numbers from the insurers
but the sector is holding up OK today. Insurance Australia Group
Limited (IAG) shares drop 1.6pct to $3.02 and Suncorp Group
Limited (SUN) also down 1.6pct to $8.33. QBE Insurance Group
Limited one of the best performing stocks on the market up
0.46pct or 6 cents to $13.10.
S&P/ASX 200 Energy Index off 1.75pct, on another slide in
the oil price overnight. US dollar oil price ended its 6 day
running streak to close lower. US oil now below US$100 a barrel.
On news that Saudi Arabia will fill any supply gaps in the global
market if Iran can't make its quota. Woodside Petroleum Limited
(WPL) off 1.89pct or 59 cents to $30.63 and Santos Limited (STO)
off 1.03pct to $12.15.
Elsewhere, Construction and engineering firm, AJ Lucas Group
Limited (AJL) continued to slide this morning after AJL resumed
trading on Wednesday after being held in suspension of more than
seven months. AJ Lucas is the largest drilling service provider
to the coal and CSG sectors in Australia. But AJ Lucas has been
doing it tough in the last year due to a downturn in earnings,
after many locations that the company operates in were hit by the
Queensland floods. AJ Lucas shares off another 5.15 pct or 6
cents to $1.10 cents.
Telstra Corporation Limited (TLS) flat at $3.33 and Qantas
Airlines (QAN) off 1.85pct to $1.45.
The Australian dollar is currently stronger at US100.78c and
€78c. After the Aussie Dollar hit an all - time high against the
Euro at €78.30cents overnight.
Craig James, CommSec Chief Economist
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