The Australian share market is likely to open lower this morning as US stocks finished weaker overnight, trimming some of the previous session's strong gains with investors responding to a mix of corporate earnings results and economic news.
In particular, the Commerce Department found that Americans saved slightly more of their disposable income in June. Personal savings rose to $725.9 billion, that’s up from $713.9 billion in May.
In other economic news, factory orders fell for the second month in a row, down 1.2% in June, after a 1.8% drop in May. The fall was more than many economist had expected.
And the National Association of Realtors said that pending home sales fell 2.6% in June. Economists thought the index would fall 5% in the month, after plunging 30% in May.
The Dow Jones Industrial Average closed 38 points weaker at 10,636. The S&P 500 Index is down 5 points at 1,120 and the NASDAQ is fell 12 points at 2,284.
European stocks finished mixed; London’s FTSE was flat, Paris lost 5 points and Frankfurt added 16 points.
Asian markets were mixed: Hong Kong’s Hang Seng up 45 points on Tuesday, Tokyo’s Nikkei up 124 points and China’s Shanghai Composite fell 46 points.
The Australian share market finished stronger yesterday, supported by overseas markets and the RBA’s decision to leave the cash rate on hold at 4.5 per cent. The S&P/ASX 200 Index closed 30 points higher at 4,572 and on the futures market the SPI200 is down 4 points. Turning to currencies and the Aussie Dollar at 7:30AM was buying 91.26 US cents, 57.23 Pence Sterling, 78.32 Yen and 69.01 Euro cents.
In local economic news being released today: ABS international trade in goods and services for June. ABS house price indexes for capital cities for June. And the AIG/CBA Performance of Services Index for July.
In business news: Shares in Rio Tinto Ltd (ASX:RIO) closed up 2.6% to $73 on Tuesday. Rio Tinto Ltd says it plans to invest a further $864.23 million to expand the annual capacity of iron ore operations in the Pilbara region of Western Australia, to 330 million tonnes a year. The expansion centres on increasing Rio’s port at Cape Lambert from its current annual capacity of 80 million tonnes to 180 million tonnes by 2016. Rio says that the proposed spending brings total investment funds approved in recent weeks to $US1 billion. Rio Tinto is hoping to combine its WA iron ore operations in a joint venture with BHP Billiton Ltd, but is still awaiting regulatory approval. Rio Tinto Ltd reported a $5.4 billion net profit for the year ending 30 December 2009.
Shares in David Jones Ltd (ASX:DJS) finished up slightly by 0.42% to $4.78 on Tuesday. The Australian Financial Review is reporting that David Jones chairman Robert Savage remains open to reaching a settlement with a former employee who is suing the retailer for $37 million. On Monday, Kristy Fraser-Kirk said in a statement of claim filed in the Federal Court that former DJs' chief executive Mark McInnes made unwelcome sexual advances and comments to her at company events in May and June. Ms Fraser-Kirk is suing nine David Jones directors, as well as the store and Mr McInnes. She claims the company took no action to address the inappropriate behaviour. David Jones reported a profit of $156 million for the year ending 30 July 2009.
To ex-dividends: Hire Intelligence International is going today with a 0.4 cent fully franked dividend. Singapore Telecommunications is going on Thursday with a 6.23 cent unfranked dividend.
To commodities, and the price of gold is up $1.80 to US$1,185 an ounce for the August contract on Comex. Silver is flat at US$18.41 and copper is 3 cents lower at $3.36 a pound.
The price of oil is up $1.21 to US$82.55 a barrel for September light crude in New York.
