S&P 500 & Dow close at record high: Aus shares to open higher

Market Reports

by Roma Christian

The Australian share market is set to open higher, after the S&P 500 & Dow Jones closed at a record high on Friday. It comes following the release of US economic data as PPI, CPI and retail sales, which were not as disastrous as some analysts feared.

The positive results come as the earnings season kicks off, with key players as JPMorgan Chase, Citigroup and Wells Fargo all posting better-than-expected profits.

The S&P 500 set intraday and closing records, climbing 0.6 per cent.

The Dow Jones Industrial Average also set an intraday record, closing 0.39 per cent higher.

The Nasdaq, too, over performed, rising 0.6 per cent.

Meantime, commodities as gold, oil, aluminium and copper have also posted gains.

US economic news

Consumer prices remained unchanged in June, which was below the 0.2 per cent increase expected. It follows a 0.1 per cent increase in May. The results point to benign inflation, and cast doubts on the Fed’s ability to raise rates for a third time this year.

US retail sales fell by 0.2 per cent in June. It comes under expectations of a 0.1 per cent rise. The results were weighed down by a decline in sales within clothing, supermarkets and restaurants. Sales fell for the second straight month.

US industrial production rose 0.4 per cent in June, which was higher than the 0.3 per cent reading expected. It comes on the back of increases within oil and gas, mining and drilling. It follows a 0.1 per cent rise in May.

Consumer sentiment fell to 93.1 in early July, states the University of Michigan’s prelimary survey. Economist expects consumer sentiment to hit 95 in July. The University will release its final July data on July 28. It follows a reading of 95.1 in June.

Local economic news - week ahead

On Tuesday, the ABS will release the June data on new vehicle sales.

Also on Tuesday, the RBA’s board minutes will be released from its July 4 meeting, with investors keeping their eyes out for comments about the possibility of interest rate rises in the future.

On Wednesday, Head of the Reserve Bank’s Economic Analysis Department, Alex Heath, will participate at the Women in Economics panel at the Australian Conference of Economists.

Due out on Thursday, from the Commonwealth Bank is the lender’s business sales indicator. It is a measure of economy-wide spending, by assessing credit and debit card transactions.

Also on Thursday, the Bureau of Statistics will release its labour force data for June.

Finally on Friday, there will be two speeches from senior Reserve Bank officials. Deputy Governor, Guy Debelle, will speak about “Global Influences on Domestic Monetary Policy” at the CEDA/University of Adelaide luncheon. Michele Bullock, Assistant Governor (for Financial System), will speak at The Australian Economic & Social Policy Conference in Melbourne.

Markets

Wall Street closed up higher on Friday: The Dow Jones Industrial average gained 0.4 per cent to close at 21,638, the S&P 500 rose 0.5 per cent to close at 2,459 and the NASDAQ jumped 0.6 per cent to close at 6,312.

European markets closed mixed: London’s FTSE lost 0.5 per cent, Paris closed flat and Frankfurt fell 0.1 per cent.

Asian markets closed higher: Tokyo’s Nikkei added 0.1 per cent, Hong Kong’s Hang Seng rose 0.2 per cent and China’s Shanghai Composite rose 0.1 per cent.

The Australian share market closed higher on Friday: The S&P/ASX 200 Index closed 28 points up to finish at 5,765. On the futures market, the SPI is up 14 points.

Company news

ERM Power Limited (ASX:EPW) has announced that Founder and non-executive director, Mr Trevor St Baker, has resigned from the Board. He will be replaced immediately by former Managing Director Mr Phillip St Baker, who had resigned from his executive role three years ago. The electric retailer says Trevor St Baker has elected to step down from the Board to actively pursue other business interests. Shares in ERM Power Limited (ASX:EPW) last traded 1.59 per cent higher to $1.28.

Ex-dividends

One company is going ex-dividend today:

Royal Wolf Holdings (ASX:RWH) is paying 2.65 cents fully franked.

Currencies

The Australian Dollar at 7.30AM was buying 78.33 US cents, 59.78 Pence Stirling, 88.12 Yen and 68.30 Euro cents.


Commodities

Gold has gained $10.20 to $US1,228 an ounce.
Silver has jumped 24 cents to $US15.93 an ounce.
Oil has increased 50 cents to $US46.75 a barrel.