The Australian share market is expected to open higher this morning as Wall Street rallied after the Federal Reserve said that recent fears about its outlook were "unwarranted". The Central Bank's comments seemed to ease investor concern as the focus then shifted to strong earnings from Wal-Mart and Home Depot.
In US economic news: A report from the Commerce Department found the number of new homes starting construction rose 1.7% to an annual rate of 546,000 in July. Building permits fell 3.1% to an annual rate of 565,000.
In other economic news, the Producer Price Index, a measure of wholesale inflation, rose 0.2% in July, after dropping 0.5% in June and that was in line with expectations.
On Tuesday in the US, the Dow Jones Industrial Average advanced 104 points to close at 10,406. The S&P 500 Index rose 13 points 1,093 and the NASDAQ is up 28 points at 2,209.
European stocks were higher; London’s FTSE advanced 74. Paris rose 66 and Frankfurt climbed 96.
Asian markets were mixed: Hong Kong’s Hang Seng up 25 points, Tokyo’s Nikkei down 35 points and China’s Shanghai Composite added 10 points.
Optimistic profit announcements and the RBA’s view that strong economic growth remains likely helped to the Australian share market lift yesterday. The S&P/ASX 200 Index closed 39 points higher at 4,477 and on the futures market the SPI200 is up 17 points. The Aussie Dollar is higher against all of the major currencies at 7:30AM and was buying 90.54 US cents, 58.12 Pence Sterling, 77.49 Yen and 70.31 Euro cents.
Locally in economic news: the latest survey of skilled job vacancies is being released today and also due is the Westpac-Melbourne Institute Indexes of Economic Activity.
In business news: Shares in BHP Billiton Ltd (ASX:BHP) closed up 0.5 per cent at $40.20 on Tuesday. BHP Billiton is attempting to become the world’s biggest fertiliser group by making a surprise $42.5 billion takeover offer for Canada’s Potash Corporation. However Potash has rejected the US$130-a-share approach, saying that the proposal was "grossly inadequate’’ in that it failed to reflect the value of its premier position in the fertiliser business in a "strategically vital industry". BHP’s move comes as the mining giant sets out to add a new world-scale commodity to its current portfolio and as it tries to bed down a joint iron ore venture with Rio Tinto. BHP Billiton reported a net profit after tax of just over $7.2 billion in 2009 which is around of the result in the two years before.
Shares in Primary Health Care Ltd (ASX:PRY) closed down 2.99% down at $3.24 on Tuesday. The company has warned that health care is becoming increasing unaffordable and that patients should expect more out-of-pocket charges as health providers try to maintain profit margins in the face of Federal Government funding cuts. Yesterday, Primary said it expected to achieve earnings before interest, tax, depreciation and amortisation of about $360 million in fiscal year 2011, that’s in the lower end of the company’s guidance range. Primary said that the introduction of co-payments for general practitioner services had increased due to government cuts and lower patient volumes. Primary Health Care Ltd net profit after tax increased in 2009 to $108 million.
Going ex-dividend today: Korvest with a 15 cent fully franked dividend and Reckon with a 3.5 cent 90 per cent franked dividend.
To commodities, and the price of gold is up $2.10 to US$1,226 an ounce for the August contract on Comex. Silver is up 17 cents to US$18.59 and copper is up 6 cents at $3.34 a pound.
The price of oil edged up 53 cents to US$75.77 a barrel for September light crude in New York.
