The Australian share market looks set for a weak start after Wall Street erased earlier gains and closed in the red. US stocks initially rose but lost ground after reports Germany’s Chancellor will not boost Europe’s bailout fund. Losses accelerated after the Fed said it would keep rates on hold and disappointed by revealing no immediate action to support the economy.
US economic news
The US Federal Reserve has held borrowing costs near zero at its December policy-committee meeting and warned Europe’s debt situation threatens the US economy. The US central bank says “strains in global financial markets continue to pose significant downside risks to the economic outlook". The Fed also says the US economy is “expanding moderately, notwithstanding some apparent slowing in global growth”.
Retail sales in America grew less than expected last month. The Commerce Department reported sales grew just 0.2 per cent in November after a rise of 0.5 per cent the month before.
Figures
Wall Street closed lower on Tuesday: The Dow Jones Industrial Average fell 66 points to close at 11,955, the S&P500 eased 11 points to close at 1,226 and the Nasdaq lost 33 points to close at 2,579.
European stocks closed mixed: London’s FTSE was up 62 points, Paris was down 11 points and Frankfurt was also down 11 points.
To Asian markets, and stocks dropped: Hong Kong’s Hang Seng was down 128 points, Tokyo Nikkei was down 101 and China’s Shanghai Composite was down 43 points.
The Australian share market spent Tuesday in the red, closing 1.4 per cent lower. The S&P/ASX 200 Index shed 59 points to finish at 4,193. On the futures market the SPI is 12 points weaker.
Currencies
The Australian Dollar at 8:35AM was buying $US1.0018 cents, 64.7 Pence Sterling, 78.14 Yen and 76.86 Euro cents.
Economic news
Due out today from Westpac Banking Corporation and the Melbourne Institute: Survey of consumer sentiment for December.
Company news
Shares in ANZ Banking Group (ASX:ANZ) lost 1 per cent on Tuesday, closing at $20.74. Analysts have earmarked ANZ bank as the best placed to pick up Asian assets from European banks looking to offload assets in the region. The Australian says Merrill Lynch analyst Matthew Davison has upgraded ANZ to a buy, claiming the bank is in a sound position to secure low-priced acquisitions from European banks retreating due to tough economic conditions. ANZ is targeting up to 30 per cent earnings growth in the Asian region by 2017. ANZ reported a net profit of $5.4 billion in the 2011 financial year.
Shares in Gunns Limited (ASX:GNS) dropped 3.12 per cent yesterday, closing at $0.155. John Gay, the former chairman of timber company Gunns, has fronted a court in Launceston charged with two counts of insider trading. Mr Gay was charged last month after selling million of dollars worth of Gunns shares in late 2009, prior to the company posting a 98 per cent profit fall in February 2010. Mr Gay did not yesterday enter a plea. Instead, the case has been adjourned until February 2012. Gunns booked a net loss of $355.5 million in the 2011 financial year.
Ex-dividends
The only company going ex-dividend today is AWE with a 5 cent fully franked dividend. Coming on Friday is Singapore Telecommunications.
Commodities
Gold is down $5.10 to $US1,663 an ounce for the February contract on Comex.
Silver is up $0.26 to $31.26 for March.
Copper is down $0.02 at $3.44 a pound.
Oil is up $2.37 at $100.14 a barrel for January light crude in New York.
