Australian Stock Market Report – Midday 12/3/2012

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December 3, 2012 1:37 PM EST

MID-SESSION REPORT
(12.30pm AEDT)

The Australian sharemarket is kicking off the new trading week in positive fashion, with the All Ordinaries Index (XAO) up 0.5 per cent or 22.3 pts to 4540.3. This adds to last week's 2 per cent rise; the local market's second straight week of gains.

Contributing to the gains is a solid piece of economic news out of China on Saturday. The health of China's manufacturing sector according to an official government report is at its best level in seven months. PMI rose from 50.2 to 50.6. A reading above 50.0 is considered a positive.

Last Friday was an uneventful session in global markets, with the Dow flat, Germany's DAX up 0.1 per cent while the U.K's FTSE and France's CAC40 slipped modestly.

Almost all sectors are higher, with the exception of the utilities which are down 0.7 per cent. BHP Billiton (BHP), Australia's biggest mining firm and the largest company on the market is up 0.7 per cent or 24 cents to $34.63. The smaller Rio Tinto (RIO) is 0.36 per cent or 21 cents higher to $58.96.

The big banks were mixed earlier in the session, however are now all improving. Commonwealth Bank of Australia (CBA) is leading the charge, with its shares up 1.6 per cent or 96.5 cents to $60.65. ANZ Banking Group (ANZ) is close behind as it is up 1.31 per cent or 32 cents to $24.68. Both Westpac (WBC) and National Australia Bank (NAB) are improving modestly.

Disappointing economic news today is keeping the Australian Dollar (AUD) under selling pressure. Retail spending was flat last month, which was worse than expected and is another confirmation that consumers are hesitant to spend just a few months out from Christmas. Bad news for job seekers also, with the number of jobs advertised by businesses on websites and in papers slipping for the eighth straight month, down 2.9 per cent in October. Home prices in capital cities were mostly higher last month, with Melbourne the exception. Darwin was once again the best performing city, with home prices rising by 3.1 per cent last quarter.

The beginning of a new month and season is always a busy time for markets. Over the next five days, the Reserve Bank will make its interest rate decision, economic growth and monthly jobs data will be also issued. The market is factoring in an 86 per cent chance of a rate cut tomorrow at 2.30pm (AEDT).

In Europe, both the European Central Bank (ECB) and the Bank of England (BoE) will be meeting to make a decision on interest rates this week, with no change expected by either bank.

In the U.S, non-farm payroll data will be one of the main areas of focus by the American market this Friday.

Following the start of daylight savings, major Asian markets will be trading between the hours mentioned below until October this year.

The Hong Kong sharemarket trades in two sessions each day and will now open for trade between 11.30am (AEST) and 2pm (AEST) while the second session is between 3.30pm (AEST) and 6pm (AEST).

Out of Japan, the first session will be between 11am (AEST) and 1pm (AEST) while the second session is between 2.30pm (AEST) and 5pm (AEST).

The Singapore exchange will be open for trade between 11am and 2.30pm (AEST) for the first session and then between 4pm and 7pm (AEST) for the second.

U.S futures are currently pointing to a slightly stronger start to trade tonight. The U.S market trades between 1.30am (AEDT) and 8am (AEDT).

So far in trade at lunch, 713 million shares have been traded worth $1.54 billion. 405 shares are up, 401 are lower and 290 are currently unchanged.

The Australian dollar (AUD) is stronger and buys US104 cents, €79.9 cents and £64.9 pence.

The AUD is the world's fifth most traded currency behind the U.S dollar, the Euro, Japanese Yen and British Pound. The AUD accounts for around 7 pct of all foreign exchange trades.

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