The Australian share market is tipped to spike at open after US and European markets rallied on optimism for Europe’s debt crisis. Investors were encouraged by signs that the region’s policy makers are moving towards stabilising the situation.
US economic news
New home sales fell less than expected last month. The Commerce Department reported that new home sales in the US fell 2.3 per cent to an annual rate of 295,000 in August.
Figures
Wall Street started the week higher: The Dow Jones Industrial Average gained 2.5 per cent, up 272 points to 11,044. The S&P500 gained 27 points to close at 1,163 and the Nasdaq rose 33 points to close at 2,517.
European stocks also closed higher: London’s FTSE was up 23 points, Paris was up 49 and Frankfurt was up 149 points.
To Asian market, stocks closed lower: Hong Kong’s Hang Seng was down 261, Tokyo Nikkei was down 186 and China’s Shanghai Composite was down 40.
Yesterday the Australian share market extended last week’s losses, closing 1 per cent down: The S&P/ASX 200 Index shed 39 points to close at 3,864. On the futures market the SPI is 105 points stronger.
Currencies
The Australian Dollar at 7:40AM was buying 98.47 US cents, 63.28 Pence Sterling, 75.25 Yen and 72.76 Euro cents.
Company news
Shares in Virgin Blue Holdings Limited (ASX:VBA) started the week with a 3.33 per cent lift, closing at $0.31. Dual-listed Air New Zealand Limited (ASX:AIZ) has boosted its stake in Australia’s second largest airline, Virgin Blue, to the takeover threshold of 19.99 per cent. Air New Zealand bought the extra 5 per cent stake at 29.7 cents per share through an equity derivative agreement with Deutsche Bank. Air New Zealand says the recent weakness in Virgin's share price provided an opportunity to gain further exposure at an attractive price. In the 2011 financial year Virgin Blue swung from a profit to a net loss of $67.8 million, but flagged an improved performance for the year ahead.
Yesterday shares in Woolworths Limited (ASX:WOW) finished 0.81 per cent higher at $24.77. Supermarket giant Woolies has poured almost half a billion dollars into buying land to expand its hardware chain Master’s and take on market leader, Wesfarmers Limited (ASX:WES) owned Bunnings. According to Fairfax last year alone Woolies and its US-based partner Lowe’s spent $429 million for its Masters rollout, of a planned 150 stores new stores within the next five years. Yesterday Woolworths forecast its net profit to grow between 2-6 per cent in the current financial year. In the 2011 financial year Woolworths increased its net profit by 5 per cent to $2.1 billion.
Ex-dividends
Three companies are going ex-dividend today: Amcom Telecommunications with a $0.03 fully franked dividend, Austbrokers Holdings with a $0.17 fully franked dividend, Cromwell Property with a $0.02 unfranked dividend. Coming up tomorrow: AV Jennings and Gerard Lighting Group.
Commodities
Gold is down $45.00 to $US1,594 an ounce for the December contract on Comex.
Silver is down $0.13 cents to $29.98.
Copper is steady at $3.28 a pound.
Oil is up $0.39 at $80.24 a barrel for November light crude in New York.
