We’re looking at a weaker start for the Australian share market this morning after Wall Street plunged on Friday on news of fraud charges against investment firm Goldman Sachs.
US stocks tumbled after the Securities & Exchange Commission accused Goldman Sachs of fraud involving subprime mortgage-backed securities.
Financial stocks around the world sank as investors started to worry about a potential crackdown on other companies.
This added to concerns among global markets about the effects of the volcanic explosion in Iceland, which has closed eurozone airspace.
There was also some bad news on the US economic front. The University of Michigan revealed consumer sentiment took a surprising negative turn early this month due to a grim outlook on income and jobs. The University of Michigan's consumer sentiment index slipped to 69.5 in mid-April from 73.6 earlier in the month. It had been forecast to rise to 75.
In more positive US economic news, housing starts were better than expected in March, according to a Commerce Department report. Housing starts rose to a 626,000 annual unit rate in March from a 616,000 unit rate in February.
The Dow Jones Industrial Average finished 126 points lower at 11,019 – ending a six-session winning streak. The S&P500 Index is down 20 points at 1,192 and the NASDAQ lost 34 points to 2,481.
European stock markets closed weaker on Friday after suffering sharp losses. London’s FTSE lost 81 points, Paris dropped 79 points and Frankfurt plunged 111 points.
Asian stocks were also lower. Hong Kong’s Hang Seng lost 293 points, Tokyo’s Nikkei is down 172 points and China’s Shanghai Composite dropped 35 points.
Australian stocks finished the week on a sour note on Friday. The S&P/ASX 200 Index finished 17 points weaker at 4,985, and on the futures market the SPI200 is down 48 points. On to currencies: the Aussie Dollar at 8:50AM was buying 92.18 US cents, 60.3 Pence Sterling, 84.73 Yen and 68.35 Euro cents.
In local economic news: The HIA-RP Data residential land report for the 2009 December quarter is set to be released.
To company news around this morning: Lihir Gold Ltd (ASX:LGL) shares closed 1.02% higher on Friday to $3.98. There are reports this morning that the miner may be holding preliminary talks with one of the world’s biggest goldminers, Newmont Mining. The Australian Financial Review reports that Newmont Mining and fellow gold mining giant Barrick Gold are believed to be potential bidders for Lihir after it rejected a takeover offer from Newcrest Mining. But it is yet to be determined whether Newmont is simply having a look or whether it could be a serious rival to Newcrest. Lihir Gold booked a loss of just over $260 million in 2009.
Telstra Corporation Ltd (ASX:TLS) shares are steady at $3.13. The telco’s media division is about to start selling television advertising that competes with the commercial networks for lounge room TV audiences. Under the plan, the company would sell branded on-demand video channels, as well as traditional commercial spots, to advertisers on its BigPond TV internet protocol television service. The newly appointed Director of Telstra Media, Chris Taylor, is heading the plan, which is part of the development of a multi-platform digital advertising strategy. The news comes as analysts and investors reveal that they believe declining customer revenue is a more significant threat to Telstra’s long-term revenue than the proposed national broadband network. Telstra posted a net profit of $4.07 billion in fiscal 2009.
There are two companies going ex-dividend today: Australian Leaders Fund with a 4 cent fully franked dividend and TPG Telecom with a fully franked 2 cent dividend.
To commodities: The price of gold is down $23.40 to US$1,136.30 an ounce for the May contract on Comex. Silver lost 75.5 cents to US$17.67 and copper is down 8.5 cents at US$3.51.
And the price of oil fell $2.27 to US$83.24 a barrel for May light crude in New York.
