The Australian share market is expected to open lower today after Standard and Poor’s cut its outlook for America’s long term debt for the first time in history. US stocks dropped sharply in response with European markets also falling after the news.
US economic news: Before the market opened, Standard & Poor’s lowered its outlook on America’s sovereign debt from ‘‘stable’’ to ‘‘negative’’. The ratings agency says that the revised outlook signals a one-in-three likelihood that it could potentially lower the long-term AAA rating on the US within two years.
Following the downgrade the Dow Jones Industrial Average tumbled 140 points, closing at 12,202. The S&P500 closed 15 points lower at 1,305 and the NASDAQ shed 29 points to close at 2,735.
European stocks closed lower on Monday: London’s FTSE down 126 points, Paris down 93 and Frankfurt down 151.
To Asian markets and stocks were mixed: Hong Kong’s Hang Seng was down 178, Tokyo Nikkei was down 35 and China’s Shanghai Composite was up 7.
The Australian share market started the week slightly higher: The S&P/ASX 200 Index added 10 points to close at 4,862. While on the futures market the SPI is currently 46 points lower.
Turning to currencies and the Australian Dollar at 7:35AM was buying $1.0504 US cents, 64.58 Pence Sterling, 86.77 Yen and 73.86 Euro cents.
Economic news: Due out today, The Reserve Bank of Australia’s April 5 monetary policy meeting minutes and the Australian Bureau of Statistics international merchandise imports for March.
Company news: On Monday shares in Lynas Corporation Ltd (ASX:LYC) fell 2.77 per cent to close at $2.46, after news broke that shareholders are threatening legal action due to conflict-of-interest concerns arising from the rare earths producers proposed sale of deposits to Forge Resources Ltd (ASX:FRG). Fairfax today reports that some shareholders have now threatened to move for a court injunction, and, launch a counterbid if Lynas does not abandon the sale. According to the report, Lynas Executive chairman Nicholas Curtis stands to increase his stake in Forge to near 40 per cent if the transaction goes ahead. Yesterday shares in Forge Resources advanced, closing 3.48 per cent higher at $1.19. In the first half of the 2011 financial year Lynas Corporation recorded a $20.5 million net loss.
Shares in Origin Energy Ltd (ASX:ORG) started the week 1.97 per cent lower at $16.38. Origin Energy has announced that it has successfully completed the $922 million retail component of an equity raising that will enable to energy producer to partially fund its $3.3 billion purchase of the New South Wales energy assets. Origin says around 79 per cent of eligible investors took up their entitlement of its fully underwritten 1 for 5 offer. Last month Origin advised that it had raised $1.13 billion through the institutional component of the entitlement offer. The company has now raised $2.052 billion, just short of the $2.3 billion maximum target announced in March. In the first half of the 2011 financial year Origin Energy booked a $100 million net loss.
Ex-dividends: The only company going ex-dividend today is Brickworks with a $0.14 fully franked dividend.
Commodities: Gold is up $6.90 to $US1,492 an ounce for the June contract on Comex, silver is up $0.39 at $42.96 for May and copper is down $0.06 at $4.20 a pound. Oil is down $2.54 at $107.12 a barrel for May light crude in New York.
