Australian Stock Market Report – Midday August 6, 2014

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By Steven Daghlian, CommSec Market Analyst | August 6, 2014 2:11 PM EST

Tough start to August continues

 The weakness continues this month, with the Australian market slipping for the fourth day following softer American shares overnight. The All Ordinaries Index (XAO), which is a measure of local market performance is down by 0.3 per cent and is trading below 5500pts for the first time in three weeks. Geopolitical risks in Ukraine and Russia continue to keep investors on edge, with reports of an increase in Russian troops on Ukraine's border.

Reuters
West, Russia Signal Line Drawn in Ukraine Crisis

 Defensive sectors such as the telcos and utilities are improving, with Telstra (TLS) up 0.4 per cent.

 The mining sector kicked off the session in the red; however modest gains from the world's largest miner BHP Billiton (BHP) are helping the industry. BHP is up 0.4 per cent, while the smaller Rio Tinto (RIO) and Fortescue Metals (FMG) are down 0.1 per cent and 0.8 per cent respectively. Mining services company Ausdrill (ASL) is down 9.1 per cent after resuming trade from a halt and warning the market it could take a $60m-$80m hit to half year profit. This would be in the form of a write-down to its goodwill due to a slowdown in mining sector projects. Chemicals and explosives company Orica (ORI) is down 2.2 per cent and has announced the potential of splitting its chemicals business from its mining services division (which it wants to give more attention to).

 The healthcare sector is a little softer; however hearing implant maker Cochlear (COH) is bucking the trend after posting a solid earnings result yesterday. COH is up 1.9 per cent and is adding to Tuesday's 10.5 per cent rise.

 The retailers are standouts with Myer (MYR), Harvey Norman (HVN) and JB Hi-Fi (JBI) all up by around 0.5 per cent at lunch. On Monday a report showed that retail spending in June rose twice as much as expected. The big four banks are losing ground and wiping out 9pts from the All Ordinaries Index.

 At lunch 750.3 million shares have been traded worth $1.63 billion. 335 stocks are higher, 459 are in the red and 298 are unchanged.

 No major economic news is scheduled for release in Australia or the region today while all markets globally are expected to trade normally.

 Looking ahead, in Europe tonight a report on German factory activity will be released together with an update on Italy's economic growth. In the US, monthly trade data will be out at 10.30pm (AEST). The market is expecting a $44 billion trade deficit in June.

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West, Russia Signal Line Drawn in Ukraine Crisis
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