Weighed down by US debt concerns the Australian share market has retreated more than 1 per cent from yesterday’s rally. Despite the US House of Representatives today approving legislation to raise the nation’s debt ceiling to avert default, weak manufacturing data from Wall Street and the threat of a credit downgrade has pushed most sectors into the red ahead of Reserve Bank of Australia’s decision on interest rates this afternoon.
The S&P/ASX200 index has fallen 46 points and is 4,452 at noon. On the futures market the SPI is 52 points lower.
Economic news
The Australian Bureau of Statistics (ABS) has reported that residential building approvals dropped more than expected, down 3.5 per cent to 12,069 units in June from May. In the twelve months to June, building approvals were 15.5 per cent lower. The ABS has also reported that capital city house prices eased less than expected, losing 0.1 per cent in the June quarter, from a fall of 1.1 per cent in the March quarter. In the twelve month to June the index was 1.9 per cent lower.
Company news
Shares in Sandfire Resources (ASX:SFR) have risen to one of the best performers in the S&P/ASX200 after the minerals explorer said it has attracted interest from Chinese, Japanese and Korean companies. Sandfire is currently ramping up its wholly owned DeGrussa copper-gold project in Western Australia and was recently cast as a potential takeover target after OZ Minerals Limited (ASX:OZL) last year bought a 19.9 percent stake in the company. CEO Karl Simich says broker valuations of between $9.00 and $11.50 for the stock are fair based on what the company has already discovered, adding that the wild card is “will there be another discovery or not”. Shares in Sandfire Resources are currently trading at $8.22, having gained 2.62 per cent in morning trade.
Shares in Bandanna Energy Limited (ASX:BND) have fallen sharply this morning following reports that India's largest power utility, NTPC Ltd, will not make a bid for the coal explorer's assets. NTPC Ltd has told Reuters that it has not bid as, "the basic price was not looking viable”. The comments come a few days after speculation emerged NTPC would bid for Bandanna’s assets. Shares in Bandanna Energy have slumped 12.75 per cent and are trading at $1.745.
Best and worst performers
Most sectors have dipped into the red: The best performing sector is Real Estate Investment Trusts, adding 5 points to 796. Shares in Westfield Retail Trust have added 1.63 per cent and trading at $2.50. Shares in Stockland and Commonwealth Property Office Fund are also higher. The worst performing sector is Financials Excluding Real Estate Investment Trusts dropping 72 points to 4,689. Shares in National Australia Bank have fallen 2.12 per cent and trading at $23.97. Shares in ANZ Banking Group and Westpac Banking Corporation are also down.
IPO's
Drill Torque Limited (ASX:DTQ) started trading today at $0.255, a 0.5 cent premium to its issue price of $0.20.
New Zealand
The NZSX50 is 10 points down. Taking a look at the top four stocks by turnover, Westpac is at the top of the list with stock down 2.1 per cent at $25.70 followed by Telecom Corporation of New Zealand, Fletcher Building and New Zealand Oil & Gas.
Gold and the dollar
Gold is trading at $US1,620 an ounce. The Australian dollar is buying $US1.0982 cents.
