The Australian share market is set to move into recovery mode today, after US stocks pushed higher on a raft of encouraging economic news.
Investors were able to look past fears of a credit crunch in China and the Fed pulling back on stimulus amid fresh data suggesting the US housing market is on the mend.
US economic news
The latest home price index was up over 12 per cent in April, compared to a year ago, in the top 20 cities across the nation. That was the biggest annual jump in seven years. Prices climbed 2.5 per cent in March - the biggest one-month rise in the 12-year history of the index.
Consumer confidence in the United States surged to a five-year high in June, beating expectations. Consumer confidence stood at 81.4 in June, up from the revised 74.3 in May – that was well above the 75 forecast by analysts.
New orders for US manufactured durable goods rose by 3.6 per cent in May, well above the 3 per cent increase that was predicted.
Wall Street responded favourably to that economic data: The Dow Jones Industrial Average gained 101 points to close at 14,760, the S&P 500 added 15 points to close at 1,588 and the NASDAQ lifted by 27 points to close at 3,348.
European markets were also stronger: London’s FTSE gained 73 points, Paris rose by 54 points and Frankfurt added 119 points.
Asian markets were mixed after a volatile few days of trade: Tokyo’s Nikkei shed 93 points, Hong Kong’s Hang Seng added 42 points, and China’s Shanghai Composite lost 4 points.
The Australian share market recovered from its mid-session lows to finish 0.3 per cent down yesterday. The S&P/ASX 200 index closed 13 points down to finish at 4,656.
On the futures market the SPI is 26 points higher.
The Australian Dollar at 7:20AM was buying $US92.58 cents, 60.03 Pence Sterling, 90.59 Yen and 70.78 Euro cents.
Perseus Mining Limited (ASX:PRU)
has cut its production forecasts and flagged changes at its mine in Ghana after a steep fall in the gold price. Maintenance issues at the Edikan gold mine have reduced daily gold production, and the miner now expects production in the second half to fall below its initial guidance. The update sent shares in Perseus on a downward spiral, losing 22.5 per cent, to close at 51.5 cents.
Rio Tinto Limited(ASX:RIO)
is considering a whole or partial sale of its Mozambique coal operations according to media reports. The reports say Rio is in talks with several investment banks as it looks to secure a financial advisor to guide the sales process.Shares in Rio dropped 2.5 per cent yesterday to close at $50.24.
Gold is down $2.00 to $US1,275 an ounce for the August contract on Comex. Silver is up $0.03 to $19.53 for July. Copper is up $0.05 at $3.07 a pound. Oil is $0.14 higher at $US95.32 a barrel for August light crude in New York.