After gaining 1.4 per cent in April the Australian share market looks set for a soft start to the month of May. As investors await the Reserve Bank of Australia’s interest rate decision this afternoon the SPI is tipping a weaker start, following falls offshore as global markets worried about news Spain has fallen back into recession.
European economic news
The Spanish government revealed yesterday its economic growth shrank for the second consecutive quarter. The report came just days after it was reveled the nation’s unemployment rate now stands at a record high of 24.4 per cent and Standard and Poor's lowered the nation’s credit rating by two notches to BBB+.
US economic news
The Commerce Department reported personal spending increased less than expected, slowing to 0.3 per cent in March while personal income increased from the month before, up 0.4 per cent in March.
The Chicago Purchasing Managers' Index dropped to 56.2 in April from 62.2 the month before. Though a read above 50 indicates expansion, the drop was bigger than expected.
Figures
Wall Street closed started the trading week down: The Dow Jones Industrial Average lost 15 points to close at 13,214, the S&P500 lost 5 points to close at 1,398 and the Nasdaq lost 23 points to close at 3,046.
European markets also closed lower on Monday: London’s FTSE lost 39 points, Paris lost 53 points and Frankfurt lost 40 points.
Asian markets closed mixed yesterday: Hong Kong’s Hang Seng added 353 points, Tokyo’s Nikkei lost 41 and China’s Shanghai Composite added 8 points.
In April the Australian share market rose for the fourth straight month, gaining 1.4 per cent last month to take this year’s gains to 8.4 per cent. Yesterday the S&P/ASX 200 index hit an eight month high, gaining 0.8 per cent or 35 points, to finish at 4,397. On the futures market the SPI is now 3 points lower.
Currencies
The Australian Dollar at 7:15AM was buying $US1.0429 cents, 64.27 Pence Sterling, 83.17 Yen and 78.81 Euro cents.
Economic news due out today
Reserve Bank of Australia: May interest rate decision and index of commodity prices for April
Australian Industry Group and PricewaterhouseCoopers: Performance of manufacturing index for April
Dun and Bradstreet: Business expectations survey
Stocks to watch
Hearing implant manufacturer Cochlear Limited (ASX:COH) advised the market last night that a complaint for patent infringement has been filed against it in the US. Cochlear says it believes the allegations of infringement are without merit and that it intends to vigorously defend against the complaint. Shares in Cochlear closed 2.02 per cent higher yesterday at $65.65 before the announcement was made.
Spotless Group Limited (ASX:SPT) has backed a sweetened $720 million takeover bid from private equity fund Pacific Equity Partners. The industrial services company will now enter into a scheme of implementation arrangement with its suitor to purchase all the shares in Spotless for $2.71 per share. Shares in Spotless Group rose 4.07 per cent after exiting a trading halt, closing at $2.56 on Monday.
Ex-dividends today
Asian Centre For Liver Diseases (ASX:AJJ)
Ex-dividends tomorrow
Bank of Queensland Limited (ASX:BOQ)
Trust Company Limited (ASX:TRU)
Commodities
Gold is up $0.60 to $US1,664 an ounce for the June contract on Comex.
Silver is up $0.388 to $31 for May.
Copper is up $0.01 at $3.83 a pound.
Oil is down $0.06 at $104.87 a barrel for June light crude in New York.
