The Australian share market is set to reverse yesterday’s gains after US stocks fell sharply on hints from the US Federal Reserve that it may begin to pull back from its $US85 billion per month bond buying program.
Fed Chairman Ben Bernanke says the Fed could begin tapering its bond-buying program later this year, and may wrap-up the program entirely by the middle of 2014 if the US jobless rate reaches a projected seven per cent.
Currencies
The Australian dollar dropped below 93 US cents for the first time since September 2010 on that news from the US Fed. At 7:20AM the Aussie was buying $US92.68 cents, 59.89 Pence Sterling, 89.32 Yen and 69.73 Euro cents.
Figures
Wall Street plunged on the suggestion the US Fed may pull back on stimulus: The Dow Jones Industrial Average fell 206 points to close at 15,112, the S&P 500 lost 23 points to close at 1,629 and the NASDAQ shed 39 points to close at 3,443.
European markets were also in the red: London’s FTSE lost 25 points, Paris dropped 21 points and Frankfurt was down by 32 points.
Asian markets were at opposite ends of the spectrum: Tokyo’s Nikkei added 238 points, Hong Kong’s Hang Seng lost 239 points, and China’s Shanghai Composite shed 13 points.
The Australian share market lifted 1 per cent in a solid day of trade yesterday. The S&P/ASX 200 index closed 47 points up to finish at 4,861.
On the futures market the SPI is 55 points down.
Economic news
The Commonwealth Bank will release its business sales indicator for May and the RBA will put out its quarterly bulletin.
Company news
Telstra Corporation Limited
(ASX:TLS) is telling contractors work cannot resume on the NBN rollout until they meet toughened asbestos handling rules, according to media reports. The telco has reportedly threatened to shred supply contracts with its three primary rollout contractors if they do not comply with toughened guidelines for removing asbestos from Telstra's pits. The contractors have reportedly been told that their management of subcontractors must improve before the contractors or subcontractors return to work. Shares in Telstra lifted 0.22 per cent yesterday to close at $4.65.
Shares in Worleyparsons Limited
(ASX:WOR) got a boost after South Korean shipbuilding giant Samsung Heavy Industries awarded it a $100 million US dollar offshore oil and gas contract in Nigeria. The news comes a month after shares plummeted to a four-year low off the back of a profit downgrade. Shares in WorleyParsons lifted 3.01 per cent yesterday to close at $19.88.
Commodities
Gold is up $7.10 to $US1,374 an ounce for the August contract on Comex. Silver is down $0.05 to $21.62 for July. Copper is down $0.01 at $3.14 a pound. Oil is down $0.20 at $US98.24 a barrel for July light crude in New York.
