The Australian share market followed US stocks to open sharply lower after Wall Street tanked on fresh stimulus concerns. Local shares are 1.1 per cent down at midday, dragged heavily by the materials sector as well as among financial stocks.
The S&P/ASX 200 index is 53 points down at 5,053. On the futures market the SPI is 59 points lower.
Economic news
Construction activity has fallen for the 38th straight month, however the pace of decline has moderated somewhat. The Australian Industry Group -Housing Industry Association Australian Performance of Construction Index (PCI) rose 4.6 points to 44.1 in July. A reading below 50 indicates decline, however the month saw solid improvements in house building and engineering construction, suggesting the building industry has put the worst behind it.
The Australian Bureau of Statistics has released housing finance data for June, revealing a 2.7 per cent rise. There were 51,001 approvals in the month, up from 49,642 in May. The result slightly surpasses economist expectations of a 2 per cent rise. Total housing finance by value increased by 2.1 per cent to $23.69 billion.
Company news
Rio Tinto Limited
(ASX:RIO) has lost three of the biggest bidders for its 59 per cent stake in the Iron Ore Company of Canada. According to various media reports, private equity firm Apollo, rival Blackstone and commodity trader Glencore have dropped out of the race following the second round of bidding. The timing and the asking price for the sale have both now been questioned, as has the prospect of Rio actually pushing ahead with it. The global miner will release its half year results tomorrow. Shares in Rio Tinto are trading down 1.5 per cent at $58.96.
Cromwell Property Group
(ASX:CMW) has created a new unlisted property trust and contracted to acquire three assets with a combined value of $129 million. Cromwell Property Trust will acquire two office buildings in Victoria and an industrial building in South Australia. The trust will attempt to raise $77 million and fund the balance of the purchase via a debt facility expected to be finalised later in this year. Shares in Cromwell are trading down 1.03 per cent at $0.96.
Best and worst performers The best performing sector is Real estate investment trusts gaining 2 points to 1,029. Shares in DEXUS Property Group
(ASX:DXS) have risen 1.5 per cent and trading at $1.02. Shares in BWP Trust
(ASX:BWP)) and Mirvac Group (ASX:MGR are also stronger.
The worst performing sector is Materials, falling 164 points to 9,347. Shares in OceanaGold Corporation
(ASX:OGC) have fallen 6.54 per cent, trading at $1.50. Shares in Beadell Resources Limited
(ASX:BDR) and Perseus Mining Limited
(ASX:PRU) are also lower.
Gold and the dollar
Gold is trading at $US1,278 an ounce and the Australian dollar is buying $US0.8965.
