Australian Stock Market Report – Midday 2/7/2013

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February 7, 2013 1:39 PM EST

MID-SESSION REPORT
(12.30pm AEDT)

The Australian sharemarket kicked the session off in the red for the third time this week, however is managing to recover at lunch. The All Ordinaries Index (XAO) is up by 0.1 per cent or 3.9 pts to 4944.4. A number of the largest companies on the local market have issued their profit numbers this morning.

Telstra (TLS), Australia´s largest telecommunications business and the local market´s sixth biggest company, has posted a profit of $1.59b for the 1H (July-Dec 2012), which was a touch lower than what the market was anticipating. Profit still rose by 8.8% while revenue edged higher by 1%. TLS added 607,000 domestic mobile customers to take its total client base of 14.4 million. Its mobile division continues to make up a big chunk of the telco´s sales (around 36% of total revenue). The shift from its fixed business to mobile continues with a 4% fall in revenue for fixed which was counteracted by a 4.6% rise in mobile sales. One of Telstra´s most attractive features for investors is its dividend (yield). TLS has paid out at least a 14 cent a share distribution to eligible shareholders each 6 months for the past 7 years. Based on its current share price, this is a return of around 6% per year. A 14 cent a share dividend will be paid to eligible shareholders on 22 March. The Telco hasn´t changed its guidance for 2013 and its shares are up 0.2 per cent or 7.5 cents to $37.59. TLS shares have improved by 4.8% so far in 2013, adding to 2012´s 31% rise.

Media giant, Newscorp (NWS) is down 3.97 per cent or $1.09 to $26.39. Its profit more than doubled to US$2.3 billion over the previous three months. This result also includes the $56 million in costs associated with the closure of News of the World. NWS Chairman and Chief Executive Rupert Murdoch said that "News Corporation's fiscal second quarter performance reflects our strong momentum. Double-digit gains in our Cable and Television businesses, along with improvements in our Publishing segment, drove revenue and earnings growth even as we seized opportunities to invest in our core businesses for long-term and sustainable growth."

The banks are mixed but mostly stronger, with National Australia Bank (NAB) the standout after issuing an update to the market. NAB recorded a 4 per cent rise in its cash profit to $1.45 billion between October and December last year. NAB is the country's fourth biggest lender. NAB is up 1.32 per cent or 38 cents to $28.48, Commonwealth Bank of Australia (CBA) is up 0.39 per cent or 25 cents to $64.88 and ANZ Banking Group (ANZ) is 0.39 per cent or 10.5 cents higher to $27.13. Westpac (WBC) is easing by 0.11 per cent or 3 cents to $28.10.

Online travel company, Webjet (WEB) is down 3.02 per cent or 15 cents to $4.82 after issuing its half yearly result. Revenue rose by 13 per cent to $31.8 million, bookings were up 7 per cent and profit jumped by $7.3 million.

The major miners are currently stronger, with Fortescue Metals (FMG) up 2.08 per cent or 1.88 per cent to $4.89. BHP Billiton (BHP) is up 0.32 per cent or 12 cents to $37.64 and Rio Tinto (RIO) is 0.79 per cent or 54 cents higher to $68.61. The miners are contributing most significantly to the improvements today.

On the economic front, 10,400 jobs were created last month while the unemployment rate currently sits at 5.4 per cent, which was better than market expectations but largely in-line with our forecasts. The Australian sharemarket reacted positively to the news while the dollar headed in the opposite direction.

Later on this evening, keep your eye on interest rate meetings for both the European Central Bank and the Bank of England between 11pm (AEDT) and 11.45pm (AEDT). Day 1 of the European Union Economic Summit will also be kicking off.

It will be quiet in the U.S however, with the weekly jobless numbers one of the highlights.

Following the start of daylight savings in October, major markets in the region will be trading between the hours mentioned below until April 2013.

The Hong Kong sharemarket trades in two sessions each day and will now open for trade between 12.30pm (AEDT) and 3pm (AEDT) while the second session is between 4pm (AEDT) and 7pm (AEDT).

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

The Singapore exchange will be open for trade between 12pm and 3.30pm (AEDT) for the first session and then between 5pm and 8pm (AEDT) 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, 797 million shares have been traded worth just $1.77 billion. 396 shares are up, 390 are lower and 297 are currently unchanged.

The Australian dollar (AUD) buys US103 cents, €76.3 cents and £65.8 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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