The ASX has defied expectations of a higher open following rallies in global markets, instead sliding at open and languishing in negative territory throughout the morning to be 0.9 per cent down at noon, with investors cautious ahead of a US call on the direction of its stimulus measures. Local stocks hit the days low after the release of the RBA’s June meeting minutes, as did the Aussie dollar.
The S&P/ASX 200 index is 45 points down at 4,781. On the futures market the SPI is 49 points lower.
Economic news
The Reserve Bank of Australia has indicated it is prepared to cut the cash rate further even though the Australian dollar is falling. In its June board meeting minutes, the central bank says the high Australian dollar has been a drag on much of the non-mining sectors of the Australian economy. According to the RBA:
‘‘The exchange rate remained at a high level considering the decline in export prices over the past year and a half. It was possible that the exchange rate would depreciate further over time, as the terms of trade declined, which would help foster a rebalancing of growth in the economy.’’
Company news
Clothing retailer Pacific Brands Limited
(ASX:PBG) has flagged possible international expansion as part of a five-year plan to offset falling earnings in a bitterly arduous domestic retail market. Chief John Pollaers has unveiled a five-year vision to shareholders, saying the company would invest in key brands, utilising the popularity of its Bonds portfolio to target new markets in the United Kingdom, United States, China and other parts of Asia. Shares in Pacific Brands are trading down 0.36 per cent at $0.70.
Elders Limited
(ASX:ELD) shares have taken a battering in early trade following its rejection of a takeover bid from rural services company Ruralco Holdings Limited
(ASX:RHL), deeming it inadequate. The share slide has come straight out of a trading halt and despite Elders saying it has entered into exclusive negotiations with a company regarding a binding offer for its Futuris automotive division. Shares in Elders are trading down 12.22 per cent at $0.08.
Best and worst performers The best performing sector is Real estate investment trusts gaining 8 points to 1,024. Shares in DEXUS Property Group
(ASX:DXS) have risen 2.38 per cent and trading at $1.07. Shares in Investa Office Fund
(ASX:IOF) are higher while Federation Centres Limited
(ASX:FDC) shares are slightly down at midday.
The worst performing sector is Energy, falling 163 points to 12,589. Shares in Aurora Oil & Gas Limited
(ASX:AUT) have fallen 3.85 per cent, trading at $2.75. Shares in Karoon Gas Australia Limited
(ASX:KAR) and Aquila Resources Limited
(ASX:AQA) are also lower.
Gold and the dollar
Gold is trading at $US1,384 an ounce and the Australian dollar is buying $US0.952.
