Australian Stock Market Report – Midday 12/7/2012

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By Steven Daghlian, CommSec Market Analyst | December 7, 2012 2:04 PM EST

MID-SESSION REPORT
(11.30am AEDT)

The Australian sharemarket is improving for the third time this week, with the All Ordinaries Index (XAO) gaining by 0.8 per cent or 36.5 pts to 4552.2. All sectors bar the utilities are higher, with the miners and financials leading the rise.

It certainly has been a busy week for the Australian market; it always is at the start of a new month and season. The number of jobs advertised by local businesses fell for the eighth straight month, the Reserve Bank (RBA) cut rates for the fourth time this year to 3 per cent, the economy grew at a slower than forecast pace and retail spending was unchanged. On a positive note, there were more than 13,000 jobs created in November while the unemployment rate surprisingly dropped from 5.4 per cent to 5.2 per cent.

CommSec Economist Savanth Sebastian said that "The doomsters have got it wrong - again. More jobs created, more hours worked and fewer people unemployed. Overall the Australian economy is holding up well despite a very uncertain global environment. While there are a number of high profile company failures and job losses, beneath the surface small and medium-sized business are still keen to put on more staff. The anecdotal evidence is that it is hard to attract and retain staff and today's jobs figures back up these observations."

The mining sector is outperforming the rest of the market, with Newcrest Mining (NCM) up 1.7 per cent or 41 cents to $24.51. BHP Billiton (BHP) is up 0.9 per cent or 30.5 cents to $34.72 while the smaller Rio Tinto (RIO) is 0.62 per cent or 37 cents stronger to $60.29.

The major banks are close behind and are up by as much as 1 per cent, with National Australia Bank (NAB), Commonwealth Bank of Australia (CBA) and Westpac (WBC) the best performers.

Department store owner, Myer (MYR) is holding its Annual General Meeting (AGM) with shareholders today and is one of the best performers. In the Chairman's Address to investors, Paul McClintock said that "While our Sales in the First Quarter reflected a modest improvement in consumer sentiment, the challenging retail and economic environment continues, both in Australia and internationally. Uncertainty at a political level is also impacting business across Australia, at a time when business and consumers alike want and need certainty. I believe that it is incumbent upon business and government, working together collaboratively and with an eye to the future, to develop an environment in which business can prosper, skills can be learned and Australians can benefit. Additional taxes and charges such as the carbon tax and the flood levy on the consumer certainly impact the discretionary retail sector, and current industrial relations settings have significantly increased our costs. As a Company, we are still frustrated by the duty and GST loophole that exists that provides overseas online retailers with an advantage over local retailers. The internet has broken down traditional trade barriers and it is critical that reforms keep pace to ensure our local businesses are competitive." Myer (MYR) shares are up 0.92 per cent or 2 cents to $2.19.

On the economic front today, Australia recorded yet another trade deficit in October as was expected. Despite the more than $2 billion deficit (imports greater than exports), the dollar value of the shortfall was slightly better than most market expectations.

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, 445 million shares have been traded worth $719 billion. 420 shares are up, 226 are lower and 284 are currently unchanged.

The Australian dollar (AUD) is weaker and buys US104.7 cents, €80.8 cents and £65.2 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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