The Australian share market is expected to open sharply lower this morning after what’s been described as one of the most gut-wrenching final hours in Wall Street’s history overnight.
The Dow plunged almost 1,000 points before recovering some of the losses, on an technical glitch in the trading of Procter & Gamble shares – there were also fears that the escalating debt crisis in Europe could be another credit crunch unfolding.
The technical glitch caused P & G shares to tumble 37% in minutes.
At the close, the Dow Jones Industrial Average finished 348 points lower at 10,520. The S&P500 Index fell 38 points to 1,128 and the NASDAQ is 83 points weaker at 2,320.
In US economic news: new claims for unemployment benefits fell to 444,000 from 451,000 the previous week. Continuing claims, a measure of Americans receiving benefits for a week or more, fell to 4,594,000 from 4,653,000 in the previous week. Further abroad, European stock markets fell with London’s FTSE down 81, Paris lost 80 points and Frankfurt dropped 50 points.
To our region now and Asian stocks were weaker with Hong Kong’s Hang Seng down 194 points, Tokyo fell 362 and China’s Shanghai Composite lost 117 points.
The Aussie share market finished deeper in the red yesterday wiping more than $25 billion from its value as resources and financial stocks led the market lower. The S&P/ASX 200 Index closed around 100 points weaker at 4,573 and on the futures market the SPI200 is significantly lower, down 173 points. On to currencies: the Aussie Dollar at 8.35AM was buying 88.52 US cents, 59.63 Pence Sterling, 80.19 Yen and 70.13 Euro cents.
In economics news, the RBA is due to publish its latest quarterly Statement on Monetary Policy. And the AIG-HIA performance of construction index for April is scheduled for release.
To company news around this morning: Shares in Fortescue Metals Group (ASX:FMG) closed 2.32% lower yesterday to $4.21. The federal government’s proposed resource super profits tax has drawn further criticism from the Australian mining industry. This time, representatives from the Western Australian mining industry have weighed into the debate – claiming the tax will have a significant impact on all Australians, not just mining companies. Fortescue Metals Group founder and chief executive Andrew Forrest has accused the prime minister of misleading the Australian people and says the tax is really about nationalising the mining industry. Joined by nine other mining chief’s in Perth yesterday, Mr Forrest warned the tax would shift jobs overseas and hurt the blue collar workers. The Minerals Council of Australia will today launch a week long advertising blitz against the 40% resources tax. Fortescue Metals Group’s 2009 net profit was $626 million.
Qantas (ASX:QAN) shares closed slightly weaker yesterday, down 0.75% to $2.64. In a move that appears to be designed to avoid another political clash – the federal government has delayed plans to ease the foreign ownership restrictions on Qantas until after the election. The Australian Financial Review reports that amendments to the Qantas Sale Act are not on government's legislative agenda in May and June and depending on federal election date, debate might even be suspended until after the election. The government said in December that the changes to Qantas ownership rules would be introduced early this year. The government wants to lifts a 25% cap on individual foreign ownership for the airline and a 35% cap on total foreign airline ownership – but retain a requirement that it be 51% Australian owner. Qantas posted a 2009 net profit of $117 million.
Australian Pharmaceutical Industries is going ex-dividend today, paying a 1 cent fully franked dividend. And on Monday Macquarie Group is going with a $1 unfranked dividend.
To Commodities, and investors flocked to gold as a safe haven - the price jumped $22.30 to US$1,196.90 an ounce for the May contract on Comex. Silver is down 2 cents at US$17.49 and copper is 3 cents lower at US$3.10.
And finally oil prices dropped to prices not seen since February. The price fell $2.86 to US$77.11 a barrel for June light crude in New York.
