The SPI is pointing to a soft start for the Australian share market following a lacklustre finish on Wall Street. US stocks clawed back from steeper losses to end almost where they started. Gains were capped by lingering concerns over the state of Europe’s economy, fuelled by a report showing Germany’s economy contracted 0.25 per cent in the fourth quarter of last year. With no domestic economic news scheduled for today eyes will be on Chinese inflation data for December.
Economic news
The Federal Reserve’s latest edition of the Beige Book has revealed economic conditions "expanded at a modest to moderate pace" in December from the month before.
Three economic institutes from France, Germany and Italy have predicted the eurozone will slip into a recession, or experience two consecutive quarters of contraction, for two quarters at the end of 2011 and early 2012. The three institutes have forecast the eurozone’s gross domestic product to have contracted 0.3 per cent in the last quarter of 2011 and to contract 0.2 per cent in the first quarter of 2012.
Figures
After advancing on Tuesday Wall Street closed little changed on Wednesday: The Dow Jones Industrial Average dipped 13 points to close at 12,449, the S&P500 finished 2 points higher at 1,294 and the Nasdaq added 12 points to close at 2,714.
European stocks finished lower on Wednesday: London’s FTSE was down 26 points, Paris was down 6 points and Frankfurt was down 11 points.
Asian markets closed mixed yesterday: Hong Kong’s Hang Seng was up 148 points, Tokyo Nikkei was up 26 points and China’s Shanghai Composite was down 10 points.
Yesterday the Australian share market rose for the second straight day, closing 0.85 per cent higher. The S&P/ASX 200 Index added 35 points to finish at 4,188. On the futures market the SPI is currently 2 points higher.
Currencies
The Australian Dollar at 8:50AM was buying $US1.0313 cents, 67.3 Pence Sterling, 79.32 Yen and 81.16 Euro cents.
Company news
Shares in Rio Tinto Limited (ASX:RIO) ended 1.57 per cent higher yesterday at $64.19. Rio’s chief financial officer has told a forum the global mining company believes Europe’s economic concerns will intensify this year. According to The Australian CFO Guy Elliott says Rio is more positive about China but still expects the nation to have a weak first quarter. The report says Rio broadly agrees that Europe will experience a mild recession, the US will avoid a double-dip recession and China will have a soft landing. In the first half of its 2011 financial year Rio Tinto reported a net profit of $7.5 billion.
Shares in Aurora Oil & Gas Limited (ASX:AUT) ended 1.52 per cent lower yesterday at $3.24. The oil and gas producer has told Fairfax it will only become cash-flow positive next year, despite expecting another year of strong production and forecasting it will be cash-flow positive by the end of this year. Executive chairman Jon Stewart says the company is already profitable and provided Aurora Oil & Gas is funded the delay in becoming cash-flow positive is not a concern. Aurora Oil & Gas was one of the S&P/ASX 200’s top performing stocks in the 2011 calendar year, its share price rising 51 per cent over last year. In the 2011 financial year Aurora Oil & Gas swung from a loss to an annual profit of $15 million.
Commodities
Gold is up $8.10 to $US1,639 an ounce for the February contract on Comex.
Silver is up $0.08 to $29.89 for March.
Copper is up $0.03 at $3.55 a pound.
Oil is down $0.51 at $101.73 a barrel for February light crude in New York.
