Australian shares are expected to open significantly lower this morning as commodities and US stocks fell overnight on investor concerns that the global economy is weaker than expected.
Wall Street tumbled as jobs data showed jobless benefits rose unexpectedly, while renewed fears of sovereign debt problems in Europe, led investors to dump riskier assets.
As a result investors turned to the safe-haven greenback, which rose against a basket of currencies. Looking closer at the latest jobs data out of the US, new claims for unemployment rose to 480,000 last week from 472,000 the week before, which is above expectations for 455,000 new claims.
The number of Americans receiving continuing benefits for a week or more rose to 4,602,000 from 4,600,000 the previous week.
In other economic news, US factory orders rose 1% in December, matching the same increase the month before.
To the scoreboard, the Dow Jones Industrial Average lost 268 points to just over 10,000 points (10,002). The S&P500 Index slipped 34 points to 1,063 and the NASDAQ is down 65 to 2,125.
To other international markets, European stocks retreated. London’s FTSE dropped 114 points, Paris lost 104, and Frankfurt is down 139 points.
Asian stocks also fell yesterday with Hong Kong’s Hang Seng fell 380 points, Tokyo’s Nikkei is down 48 and China’s Shanghai Composite lost 9 points.
Aussie stocks closed lower yesterday with the S&P/ASX 200 Index finished 26 points lower at 4,622 and on the futures market the SPI200’s is significant lower, down 134 points.
On to currencies: the Aussie Dollar at 8:35AM was buying 86.43 US cents, 76.88 Yen, 62.94 Euro cents and 54.87 Pence Sterling.
In local economics news: the RBA’s statement on monetary policy and AIG/HIA January construction index.
In company news about this morning:
Shares in CSR (ASX:CSR) dived 6.5% yesterday to close at $1.72. CSR directors are expected to meet early next week to discuss the company’s next step after this week's shock decision by the Federal Court to block the group’s demerger. On Wednesday, Justice Margaret Stone said CSR couldn’t go ahead with its plans to spin off its sugar and building materials businesses. The Australian Financial Review is quoting an unnamed source close to the deal as saying that CSR may now scrap the demerger plans and look at other alternatives. CSR has reportedly been approached again by Chinese suitor Bright Food which had offered the company $1.5 billion for its sugar unit. CSR posted a $326 million loss in 2009.
Shares in Lincoln Minerals Ltd (ASX:LML) closed 5.26% higher yesterday at 40 cents. Lincoln will retain full ownership of a tenement on South Australia's Eyre Peninsula after IronClad Mining Ltd withdrew from a joint venture. Under an agreement signed in February 2008, IronClad could earn up to 80% of the rights to explore for and mine iron ore within Lincoln's Wilcherry exploration licence. But IronClad has told Lincoln it won’t meet expenditure commitments. Lincoln’s 100% retention of the iron ore rights on its Wilcherry project, includes all associated resource estimates and drill data funded and assembled by IronClad. Lincoln Minerals recorded a loss of $1.71 million in 2009.
Taking a look at ex-dividends: Australian Foundation Investment Company is going today with an 8 cent fully franked dividend and Westfield with its dividend to be announced.
To commodities: Gold plunged $48 to US$1,064 an ounce for the April contract on Comex. For the March contract silver fell 99 cents to US$15.33 and copper is down 10 cents at US$2.88.
The price of oil is down $3.94 to US$73.04 a barrel for March light crude in New York.
