The Australian share market is expected to get off to a weak start this morning as US stocks were dragged lower overnight on a disappointing durable goods orders report and weaker quarterly results from Boeing, both of which added to worries about the pace of the economic recovery.
Looking closer at the latest economic news: durable goods orders, which include products meant to last at least three years, such as cars and computers, fell 1% in June after dropping 0.8% in May, surprising economists who thought orders would rise 1%.
The Dow Jones Industrial Average lost 40 points at 10,498. The S&P 500 Index fell 8 points to1,106 and the NASDAQ dropped 24 points at 2,265.
European stocks were mixed: London’s FTSE is down 46 points, Paris gained 4 points and Frankfurt dropped 28.
To Asian markets were higher: Hong Kong’s Hang Seng advanced 118 points, Tokyo’s Nikkei rose 256 points and China’s Shanghai Composite added 58 points.
The Australian share market closed higher yesterday with the S&P/ASX 200 Index lifting 33 points to 4,530 and on the futures market the SPI200 is down 23 points. The Aussie Dollar at 7:30AM was buying 89.12 US cents, 57.18 Pence Sterling, 77.9 Yen and 68.61 Euro cents.
In local economic news: the Housing Industry Association releases the results for new home sales in June. And the Melbourne WHK SME Pulse Survey of small and medium sized businesses is out.
In business news: Rio Tinto (ASX:RIO) shares closed higher yesterday, adding 1.36% to $71.04. Rio Tinto and its biggest shareholder Chinalco are expected to formally sign off on a $4.4 billion programme for one of the world’s biggest undeveloped iron ore deposits, the Simandou project in West Africa. A signing ceremony on the deal will be held in China today - which only serves to strengthen Rio’s ties with the nation. Production is expected to start in 2015 but the Australian Financial Review reports that at that stage the global iron ore market will have moved into oversupply with other big rival mining expansion projects also happening at that time. The concern among many analysts is that China could pressure Rio to proceed with the project even if market conditions turn ugly. Some shareholders have also expressed concern that the deal might give China too much control over the iron ore market. Rio Tinto’s 2009 net profit was around $5.4 billion. Shares in Primary Healthcare Ltd (ASX:PRY) closed 0.54% higher yesterday at $3.71. Australia’s largest private medical services group has weighed into the election debate - warning that around $700 million in funding cuts under the Gillard Government are threatening the nation’s preventative health strategy. The Australian Financial Review reports that Primary’s chief executive officer Ed Bateman said that the funding cuts affecting private health and increased co-payments, were undermining the work of general practitioners. A co-payment is the amount that is paid to bridge the gap between the Medicare rebate and the price charged for the medical service. Dr Batement has also told the newspaper that reduced funding to private healthcare, outside of hospitals, had lead to a drop in tests for preventative illnesses like cervical and prostate cancer. Dr Bateman’s comments also support statements made by Sonic Healthcare on the issue of preventative tests. Primary Healthcare’s 2009 net profit increased on the two years before and came in at $108 million.
Turning to ex-dividends: Alcoa is going tomorrow and Ramelius Resources is going on Monday.
To commodities, and the price of gold rose $2.40 to US$1,160.40 an ounce for the July contract on Comex. Silver is down 20 cents to US$17.42 and copper is 4 cents higher at US$3.24 a pound.
The price of oil slipped 51 cents lower to US$76.99 a barrel for August light crude in New York.
