Australian shares are poised to break an eight day losing streak and open higher as investors focus on the pending release of a deal on the resources super profits tax between the Federal Government and major mining companies.
The market otherwise received a negative lead from US stocks overnight, after a range of economic news reignited fears that the economy is sinking back into recession.
In economic news: The Institute for Supply Management's index for June fell to 56.2 from 59.7 in May. That fall was more that economists had expected.
The US government reported construction spending eased 0.2% in May, after rising 2.3% in April. Economists thought it would fall by more than that.
The National Association of Realtors said its pending home sales index plunged 30% in May, after rising 6% in April. The big drop reflects the end of the tax rebates for homebuyers.
And the weekly jobless claims report showed a rise in new claims to 472,000 from a revised 459,000 the week before.
And finally, continuing claims rose to 4,616,000 from a revised 4,573,000 in the previous week.
Most of that economic news helped send the market sharply lower for most of the day but managed to trim big losses. The Dow Jones Industrial Average fell 41 points at 9,733. The S&P 500 Index slipped 3 points 1,027 and the NASDAQ lost 8 points at 2,101.
European stocks closed lower; London’s FTSE is down 111 points, Paris lost 103 and Frankfurt fell 108.
Asian markets were lower: Hong Kong’s Hang Seng is down 120, Tokyo’s Nikkei plunged 191 and China’s Shanghai Composite is 25 points lower.
The Australian share market finished in the red for an eighth session in a row on Thursday. The S&P/ASX 200 Index closed 64 points lower at 4,238 and on the futures market the SPI200’s up 23 points. Turning to currencies and the Aussie Dollar at 7:30AM was buying 84.32 US cents, 55.58 Pence Sterling, 73.94 Yen and 67.39 Euro cents.
In business news: Shares in Fortescue Metals Group (ASX:FMG) closed 2.91% lower yesterday to $4. As the Gillard Government is on the brink releasing the details of a deal with mining giants over the resources super profits tax (RSPT), Fortescue Metals Group has warned that any negotiated compromise on the tax should include input from the nation's entire mining sector. Fortescue spokesman Paul Downie told Reuters that all mining companies should be consulted, not just the country’s three biggest. It follows reports late yesterday that the government struck a deal with BHP, Rio and Xstrata behind closed-door and will announce details this morning. There is real concern among smaller miners that they’ve been left out of the deal. In the year to June 30 2009, Fortescue Metals achieved a $626 million net profit.
Shares in Westpac (ASX:WBC) closed 1.98% lower at $20.81. Westpac Banking Group has hit out at claims that one of its senior executives may have breached ASIC’s disclosure obligations. The Herald Sun newspaper reports the bank denies chief financial officer Phil Coffey revealed market-sensitive information at a meeting with Royal Bank of Scotland last month when providing a review of the bank's first half results. The newspaper says that Mr Coffey allegedly told the meeting that Westpac would lift its mortgage book next year in line with rising funding costs, contrary to the bank's policy of keeping in line with the moves of the Reserve Bank. A Westpac spokesman however has said that Mr Coffey's comments had been misrepresented. Westpac’s 2009 net profit was just over $3.4 billion.
Going ex-dividend is Programmed Maintenance Services with a 6 cent fully franked dividend. And among those companies going next week is Tutt Bryant.
To commodities, and the price of gold plunged $39.20 to US$1,206.30 an ounce for the July contract on Comex. Silver is down 91 cents to US$17.76 and copper is 7 cents weaker at $2.86 a pound.
And the price of oil fell $2.68 cents to US$72.95 a barrel for August light crude in New York.
