The Australian market looks set for a weaker start after Wall Street closed lower on disappointing corporate results and a pessimistic report from the US Federal Reserve. Investors are also remaining cautious ahead of this weekend’s European Summit to address the region’s sovereign debt situation.
US economic news
The Federal Reserve’s Beige Book indicated that the US economy is losing momentum. The Fed says, “Overall economic activity continued to expand in September, but many districts described the growth as modest or slight and contacts generally noted weaker or less certain outlooks for business conditions."
The Consumer Price Index increased 0.3 per cent last month, according to the US Bureau of Labor Statistics. Over the year to September the all items index jumped 3.9 per cent, marking the largest increase in three years.
Figures
On Wednesday, the Dow Jones Industrial Average fell 72 points to close at 11,505, the S&P500 lost 16 points to close at 1,210 and the NASDAQ dropped 53 points to close at 2,604.
European stocks closed higher: London’s FTSE was up 40 points, Paris was up 16 and Frankfurt was up 36.
To Asian markets, and stocks closed mixed: Hong Kong’s Hang Seng was up 233 points, Tokyo Nikkei was up 31 and China’s Shanghai Composite was down 6.
The Australian share market added 0.6 per cent on Wednesday: The S&P/ASX 200 Index rose 27 points to close at 4,214. On the futures market the SPI is 37 points weaker.
Currencies
The Australian Dollar at 8:20AM was buying $US1.0234, 64.9 Pence Sterling, 78.62 Yen and 74.41 Euro cents.
Company news
Yesterday shares in Virgin Blue Holdings Limited (ASX:VBA) lifted 2.9 per cent, closing at $0.355. Australia’s second largest carrier, Virgin Australia, has vowed to provide additional capacity in response to ongoing industrial action from Qantas Airways Limited (ASX:QAN). CEO John Borghetti says Virgin has been steadily increasing its capacity over the past three months and will continue to add more seats leading up to the busy holiday period. Industrial action from Qantas workers shows no signs of abating with calls increasing for government intervention. In the 2011 financial year Virgin Blue booked a net loss of $67.8 million.
On Wednesday shares in MAp Group (ASX:MAP) closed 0.91 per cent higher at $3.33. Airport operator MAp Group says Sydney Airport saw 2.2 per cent less domestic passengers in the third quarter of this year while international traffic increased 3.5 per cent. MAp, the majority owner of the airport, noted that Sydney Airport’s traffic in the quarter was impacted by the grounding of Tiger Airways and industrial action from Qantas. In the nine months to the end of September 2011, the airport posted a 2.8 per cent increase in EBITDA and a 3.8 per cent increase in revenue. In the first half of its 2011 financial year MAp Group reported a net loss of $296 million.
Ex-dividends
Two companies are going ex-dividend today: Multiplex European Property Fund with a $0.10 cent unfranked dividend and Redflex Holdings with a $0.05 cent fully franked dividend.
Commodities
Gold is down $5.80 to $US1,647 an ounce for the December contract on Comex.
Silver is down $0.55 cents to $31.28.
Copper is $0.10 lower $3.26 a pound.
Oil is down $2.23 at $86.11 a barrel for November light crude in New York.
