Aussie shares are expected to open higher today, as US equities rallied to a five month high on strong service sector data, with investors applauding a move by the Bank of Japan to boost its economy by dropping its key lending rate.
In US economic news: The Institute for Supply Management reported its service-sector index increased to 53.2 in September, up from 51.5 in August- a read over 50 showing growth in the sector.
On Tuesday, the Dow Jones Industrial Average closed 193 points up at 10,945. The S&P 500 Index is up 24 at 1,161 and the NASDAQ is up 55 at 2,400.
European stocks were higher: London’s FTSE up 80 points, Paris is up 82 and Frankfurt up 82.
Asian markets were higher: Hong Kong Hang Seng up 20, Tokyo’s Nikkei was up 138 and China was closed.
The Australian share market finished lower on Tuesday. The S&P/ASX 200 Index closed 18 lower to 4,607 and on the futures market the SPI200 is up 63 points. Turning to currencies and the Aussie Dollar at 8:40AM was buying 97.19 US cents, 61.17 Pence Sterling, 80.86 Yen and 70.24 Euro cents.
In company news: Shares in Rio Tinto Ltd (ASX:RIO) closed 1.38% down at $77.00 on Tuesday. Rio Tinto Ltd has confirmed that it has not made a final decision on its $120 billion iron ore joint venture with rival global miner BHP Billiton Ltd (ASX:BHP). Responding to media reports indicating that the deal, that would be one of the largest joint ventures in Australian history, was to be abandoned, Rio says it held a meeting at the beginning of the week to discuss a range of issues. Adding, that recent communication from regulators indicate potential obstacles to achieving clearance for the joint venture. According to Reuters, the deal may also be hindered by Rio’s improving financial fortunes, shareholder pressure and the notion that BHP is favoured in the proposal. Rio Tinto recorded a $7.37 billion profit in the six months to 30 June 2010.
Shares in Singapore Telecommunications Ltd (ASX:SGT) closed 0.4% down at $2.49 on Tuesday. SingTel-owned Optus, has been scolded by the Australian Competition and Consumer Commission in the Federal Court in Melbourne for slowing its broadband speeds after customers go over a download limit on an unlimited plan, says The Age. According to the paper, Justice Tony North told the court that unlimited broadband advertising gave customers the impression they were getting a Ferrari without letting them know that the steering wheel disintegrates after 10 kilometres. The report says Optus has now ceased advertising the word unlimited, but the ACCC is still claiming throttling is a significant constraint on a service sold as unlimited. The Age says Optus will have 10 days to collect evidence of whether its customers were constrained by the throttling and the trial has been adjourned to 26 October. Singapore Telecommunications earned more than $3 billion in the year to 30 March 2010.
To ex-dividends: The two companies going ex-dividend today are Gowing Brothers with a 5 cent dividend and Kresta Holdings with a 1.5 cent dividend, both fully franked. Coming up tomorrow we have Australian Governance Masters Index Fund, Gerald Lighting Group, OrotonGroup and Toll Holdings.
To commodities: and the price of gold is up US$23.50 to US $1340 an ounce for the December contract on Comex, silver is down US$0.70 to $22.74 and copper is up $0.06 at $3.73 a pound. The price of oil is up $1.35 to US$82.82 a barrel for November light crude in New York.
