The Australian share market is likely to open weaker this morning after stocks on Wall St tumbled overnight due to the falling value of the Euro and fears that Europe’s debt woes could threaten the recovery of the US economy.
US stocks slumped on Tuesday as the value of the Euro slid to its lowest level in four years against the US dollar heightening concerns for the debt situation in Europe and overshadowing stronger than expected profit results from the retailers.
In economic news out of the US overnight, a report showed that housing starts rose 5.8% to a rate of 672,000 in April, up from 635,000 in March. Economists expected 655,000.
However, building permits fell 11.5% in April to a rate of 606,000 from 685,000 in March, economists expected a rate of 680,000.
And a separate report on wholesale inflation, showed that the Producer Price Index fell 0.1% in April after rising 0.7% in March.
Taking a look at the figures, and the Dow Jones Industrial Average finished 115 points lower at 10,511 on Tuesday. The S&P500 Index dropped 16 to 1,121 and the NASDAQ is 37 points lower at 2,317.
European stock markets finished higher. London’s FTSE is 45 points higher, Paris gained 74 points and Frankfurt added 89 points.
Turning to Asian markets, and Hong Kong’s Hang Seng is up 230 points, Tokyo’s Nikkei advanced 7 and China’s Shanghai Composite is 35 points higher.
The Australian share market closed marginally higher on Tuesday. The S&P/ASX 200 Index closed 4 points higher at 4,471 and on the futures market the SPI200 is down 52 points. On to currencies: the Aussie Dollar at 8:40AM was buying 86.12 US cents, 60.28 Pence Sterling, 79.19 Yen and 70.74 Euro cents.
In local economic news: The ABS is to release data on international merchandise imports for April and the labour price index for March, out as well is the Westpac/Melbourne Institute survey of consumer sentiment for May and the Department of Employment and Workplace Relations vacancy report.
To company news around this morning: Shares in Telco Telstra Corporation Ltd (ASX:TLS) rose 1.35% to $3.01 on Tuesday. In an interview with The Australian newspaper, CEO David Thodey reaffirmed the company’s earnings expectations despite recent analyst downgrades. The paper reports Mr Thodey saying that regulatory changes, talks concerning the NBN and the impact of changes in the wholesale market, had made it a tough first year as head of the Telco. However, Mr Thodey says Telstra expects to achieve low single-digit revenue declines, steady earnings margins and earnings before interest, tax, depreciation and amortisation growth in the low single digits. In other news, Telstra has lost its bid to increase the cost for its rivals to access its copper fixed-line network after the Australian Competition Tribunal rejected the request. Telstra’s fiscal 09 profit came to $4.073 billion.
Shares in grocery retail giant Woolworths Ltd (ASX:WOW) added 0.33% to $27.15 yesterday. Woolies is reportedly still interested in acquiring New Zealand based discount retailer The Warehouse Group. According to a report in the Australian Financial Review, CEO Michael Luscombe says the company continues to hold discussions with The Warehouse Group’s major shareholder, Stephen Tindall, in the hopes of brokering a deal. Woolworths mulled over a takeover bid three years for the retailer after acquiring a 10% stake in the company, however the bid was blocked by New Zealand’s Commerce Commission because they believed it would significantly lessen competition. Woolworths earned over $1.8 billion in the 2009 financial year, an improvement on the year before.
Just one company going ex-dividend today, and that is Asian Masters Fund with a 1 cent fully franked dividend. Coming up next week we have Orica and SP AusNet on Wednesday. To commodities, and the price of gold slipped $13.40 to US$1,214.30 an ounce for the May contract on Comex. Silver is up 2 cents at US$18.86 and copper is 10 cents stronger at US$3.02.
And finally oil fell to a new seven month low overnight after the value of the Euro continued to drop against the US dollar, oil down $0.67 cents to US$69.41 a barrel for June light crude in New York.
