The Australian share market looks poised to lift this morning as investors assess the implications from the US Federal Reserve’s latest statement. On Wall Street stocks closed a choppy session mixed after a welcomed extension of stimulus measures from America’s Central Bank was offset by a gloomy assessment of the economy. In Europe stocks rose amid news Greece has formed a coalition government.
US economic news
The US Federal Reserve’s Operation Twist stimulus program has been extended by $US267 billion, meaning the program will now continue until the end of the year.
America’s Central Bank has cut its forecast for economic growth this year to between 1.9 per cent to 2.4 per cent, from a range 2.4 per cent and 2.9 per cent forecast in April.
The Fed has also boosted its forecast for the unemployment rate, expecting it to reach between 8 per cent to 8.2 per cent by year’s end, from an earlier forecast of 7.8 per cent.
US interest rates have been maintained at near zero, in line with the Bank’s commitment to maintain rates "exceptionally low" until 2014.
Wall Street finished mixed amid volatile trade on Wednesday: The Dow Jones Industrial Average lost 13 points to close at 12,824, the S&P500 eased 2 points to close at 1,356 and the Nasdaq firmed 0.69 points to close at 2,930.
European markets rose on Wednesday: London’s FTSE added 36, Paris added 9 and Frankfurt added 29.
Asian markets closed mixed yesterday: Hong Kong’s Hang Seng added 102, Tokyo’s Nikkei gained 96 and China’s Shanghai Composite lost 8 points.
The Australian share market declined steadily yesterday to end just 0.2 per cent higher. On Wednesday the S&P/ASX 200 index added 9 points to close at 4,132. On the futures market the SPI is now 15 points higher.
The Australian Dollar at 7:20AM was buying $US1.019 cents, 64.85 Pence Sterling, 81.03 Yen and 80.21 Euro cents.
Economic news out today
Westpac Banking Corporation (ASX:WBC)-ACCI: Survey of industrial trends
Rio Tinto Limited (ASX:RIO) has defended its iron ore expansion plans amid doubts over demand for the steel making commodity. CEO Tom Albanese says the global miner is directing investment to projects that will generate the most attractive returns for shareholders and are resilient under any probable macro-economic scenario. Rio announced yesterday it will commit $US4.2 billion to develop its tier one iron ore business. Shares in Rio Tinto rose 1.67 per cent yesterday, closing at $57.72.
DuluxGroup Limited’s (ASX:DLX) battle to takeover building materials company Alesco Corporation Limited (ASX:ALS) is slowly progressing. After extending its $188 million bid on Monday the paint maker announced yesterday it has now boosted its stake in Alesco to 19.76 million shares. Alesco continues to reject its largest shareholder’s takeover offer which is set to close on July 20, 2012. Shares in DuluxGroup lifted 0.33 per cent yesterday, closing at $3.00.
Dicker Data Limited (ASX:DDR) with a 1.5 cent fully franked dividend
Gold is down $8.70 to $US1,607 an ounce for the August contract on Comex.
Silver is down $0.31 to $28.08 for July.
Copper is down $0.05 at $3.38 a pound.
Oil is down $0.74 at $81.06 a barrel for July light crude in New York.