Some strong gains on Wall Street last Friday saw the Australian share market kick off its shortened trading week strongly and fluctuate above the red line in early trade, with local shares hovering 0.2 per cent higher at noon. Investors are digesting the economic news of the morning right now- namely an 11 year low in mining capex revealed in NAB’s business survery- and resources stocks might take a resultant hit as the day goes on. The dollar has also taken a sharp dip on disappointing home loan approval figures.
The S&P/ASX 200 index is 9 points up at 4,746. On the futures market the SPI is 46 points lower.
Economic news
Mining capex has reached its lowest level in over a decade, according to the NAB business survey for May. Capital expenditure in mining sank 37 points to an index reading of negative 44 points. NAB’s chief economist Alan Oster highlighted a slowdown in labour intensive mining investment and weakness in gross national expenditure as instrumental in the banks decision to soften its GDP growth forecast to 2.3 per cent in the next financial year. Amid the resources gloom, the business conditions index reading came in at minus 4, a slight improvement on April’s minus 6 reading, achieved in a climate of falling dollar prices and historically low interest rates.
Home loan demand fell below expectations in April according to the Australian Bureau of Statistics. The number of home loans lifted 0.8 per cent to 48,475, short of analyst expectations for a 2 per cent rise.
Australian Dollar
On the back of the weakened home loan figures, the Aussie dollar fell below the $US0.94 cent mark, hitting a 32 month low of $US0.9388. The Australian dollar is currently buying $US0941.
Company news
Worleyparsons Limited
(ASX:WOR) has been awarded an engineering services contract relating to the Kansanshi copper smelter development in Zambia. CEO Andrew Woods says Worley looks forward to working with the projects 80 per cent owner, offshore listed First Quantum Minerals, to realise the strategic objectives of the world scale development. Shares in Worleyparsons are trading up 1.36 per cent at $19.38.
CSR Limited
(ASX:CSR) has told shareholders that a rebound in earnings may be stagnated by ongoing tough trading conditions.
The building materials group has spent time recouping the losses from its doomed glass division and does not expect to return to the black before March next year. Shares in CSR are trading up 0.25 per cent at $2.00.
Best and worst performers The best performing sector is Healthcare gaining 311 points to 12,742. Shares in Sirtex Medical Limited
(ASX:SRX) have risen 4.36 per cent and trading at $11.98. Shares in Sonic Healthcare Limited
(ASX:SHL) and CSL Limited
(ASX:CSL) are also stronger.
The worst performing sector is Real estate investment trusts, falling 3 points to 1,022. Shares in Mirvac Group
(ASX:MGR) have fallen 3.06 per cent, trading at $1.58. Shares in Stockland
(ASX:SGP) and Westfield Group
(ASX:WDC) are also lower.
Gold
Gold is trading at $US1,382 an ounce.
