The Australian share market is expected to open slightly higher this morning as investors digested news of BP's agreement to establish a $20 billion compensation fund to assist those affected by the Gulf oil spill.
The news helped Wall Street lift after a choppy session to finish relatively flat. Trading in the US was affected by cautious comments from economic bellwether FedEx and weak housing market data overshadowed a surge in industrial production.
The Federal Reserve reported that industrial production climbed 0.2% in May, after rising 0.7% the previous month.
In other economic news, the Commerce Department said that building permits, a measure of builder confidence, fell by 5.9% in May.
And a US Government report showed that the Producer Price index (PPI), a key measure of wholesale inflation, fell 0.3% in May after slipping 0.1% in April. Core PPI, which strips out volatile food and energy prices, rose 0.2%.
The Dow Jones Industrial Average finished 5 points stronger at 10,409. The S&P 500 Index is flat at 1,115 and the NASDAQ also closed steady at 2,306.
European stocks were higher; London’s FTSE rose 20 points, Paris gained 14 and Frankfurt is up 16.
To Asian markets now and Tokyo’s Nikkei gained 179 points. Hong Kong’s Hang Seng and China’s Shanghai Composite were closed for a public holiday.
The Australian share market closed higher. The S&P/ASX 200 Index gained 54 points at 4,559 and on the futures market the SPI200’s up 6 points. Turning to currencies and the Aussie Dollar at 7:40AM was buying 86.27 US cents, 58.6 Pence Sterling, 78.87 Yen and 70.14 Euro cents.
In local economic news: Melbourne Institute's household savings report for JuneAustralian Chamber of Commerce and Industry/Westpac survey of industrial trends.
In business news: Shares in BHP Billiton (ASX:BHP) closed 2.19% higher to $39.23 yesterday. BHP and Rio Tinto have dismissed the Rudd Government’s claim to be engaged in detailed negotiations on the proposed resource profit tax. Chief executives from both mining companies emerged from a meeting in Canberra yesterday and released a joint statement with Xstrata Coal saying ‘at present there's no formal acknowledgement from the government” that the mining industry’s tax concerns will be addressed.’ Global mining companies are reviewing, suspending or slowing Australian projects because of the Prime Ministers plan to introduce a 40% tax on mine profits starting from 2012. BHP, Rio and Xstrata want the government to exclude existing projects from the tax and reconsider the rate. Meanwhile analysts have warned that the expansion of BHP’s Olympic Dam mine in South Australia is unlikely to proceed if the tax were imposed. Looking at BHP Billiton’s net profits, the mining giant posted a $7.2 billion in 2009.
Shares in Telstra (ASX:TLS) closed 0.32% higher yesterday to $3.18. Telstra will launch its new T-Box into the retail market today. At $299, the internet and digital video recorder is set to steer us all into a new stage of digital functionality. The T-Box allows users to watch the digital free-to-air channels, BigPond TV, movie downloads and yet-to-be-revealed content on their TVs. Telstra is also expected to announce an increase to the broadband data allowance available as part of today’s launch. Telstra’s net profit in the year to June 30 2009 was just over $4 billion.
Checking ex-dividends, going today are PaperlinX SPS Trust with around a $3.36 unfranked dividend and Thorn Group paying a 3.76 cent fully franked dividend. Metcash is going ex-dividend tomorrow.
To commodities, and the price of gold fell $3.90 to US$1,229.30 an ounce for the June contract on Comex. Silver is down 14 cents at US$18.43 and copper is steady at $2.99 a pound.
And the price of oil is up 73 cents to US$77.67 a barrel for July light crude in New York.
