Midday: Shares dragged lower by miners

Market Reports

Aussie stocks are in negative territory at midday, dragged down by the heavyweight miners as investors digest news that the government plans to slap a 40% tax on mining profits.

BHP Billiton and Rio Tinto have voiced concerns about the impact the new tax could have on their Australian operations, and there are also fears the tax could jeopardise investment in the resources sector, with speculation that US coal miner Peabody Energy may now reconsider its bid for Macarthur Coal.

The S&P/ASX200 index is 25 points lower at 4,783 and on the futures market, the SPI200’s down 29.

In economic news: Manufacturing growth accelerated in April to the fastest pace in almost eight years. The Australian Industry Group/PricewaterhouseCoopers performance of manufacturing index jumped 9.3 points from March to a read of 59.8, the highest level since May 2002. A figure above 50 shows the industry is expanding.

And the TD Securities-Melbourne Institute inflation gauge rose by 2.9% in the year to April, marking the biggest gain in 14 months. The increase follows a 2.5% inflation rise in the year to March.

In company news: Qantas Airways Ltd (ASX:QAN) says passenger numbers across its airlines increased by 11.2% in March, compared to the previous corresponding period. For the financial year to March 31 passenger numbers were up 8.1% from the year before. Qantas carried 3,565 passengers during the month, compared with 3,207 in March 2009. Meanwhile, the company says it will update the market on the impact of the recent shutdown in international air space on its business shortly. Qantas Airways shares are steady at $2.84.

BT Investment Management Ltd (ASX:BTT) has increased its first-half profit by 58% thanks to the recovery in equity and credit markets. The fund manager reported a net profit of $9.7 million for the six months to March 31, up from $6.1 million for the same period a year before. Cash profit gained 11% to $14.2 million. It had $36.3 billion worth of funds under management as of March 31, 19% more than the year before. The company has declared a fully franked interim dividend of 5.5 cents per share. Shares in BT Investment Management rose 5.39% to $2.68.

Turning now to market indices: The best performing sector at midday is the Health Care index, up 92 points at 8,505. Shares in ResMed added 4.94% to $7.43. Shares in Biota Holdings and CSL are also higher at noon.

The worst performing sector is the Materials index, down 305 points to 11,988, investors wiping about $10 billion off the value of mining companies in early trade. Shares in Macarthur Coal declined 7.11% to $14.37, while shares in Rio Tinto and Fortescue Metals Group are also lower.

Looking to New Zealand and the NZSX50 is down 7 points. Taking a look at the top 4 stocks by turnover: Heading the list is Telecom of New Zealand stock down 0.46% at $2.16 followed by; Fletcher Building, Fisher & Paykel Appliances and Guiness Peat Group.

To gold and the dollar: Gold is trading at US$1,177.40 an ounce and the Aussie dollar is trading at 92.48 US cents.