The Australian share market is expected to open weaker after US stocks were down for the third consecutive session and following a massive four per cent tumble in Japan's Nikkei 225 index.
Wall Street declined on fears the US Federal Reserve could trim back its bond-buying program in the coming months.
Meantime, the plunge in Japanese stocks came during a two-day meeting of the Bank of Japan and as the yen rose against the dollar. Traders say the fall in the Nikkei Stock Average was aggravated by low trading volumes that have nearly halved from their May levels. They say the Japanese market has been dominated by movements in the dollar against the yen. A stronger yen means the value for overseas earnings by Japanese companies becomes reduced.
Figures
Wall Street was in the red: The Dow Jones Industrial Average lost 48 points to close at 15,471, the S&P 500 fell 6 points to close at 1,691 and the NASDAQ dropped 12 points to close at 3,654.
European markets were mostly lower: London’s FTSE tumbled by 93 points, Paris added 6 points and Frankfurt lost 39 points.
Asian markets plummeted: Tokyo’s Nikkei dived by 576 points, Hong Kong’s Hang Seng fell by 335 points, and China’s Shanghai Composite lost 14 points.
The Australian share market closed sharply lower yesterday. The S&P/ASX 200 index closed 94 points down to finish at 5,011. On the futures market the SPI is 9 points lower.
Currencies
The Australian dollar has rallied in early trade. At 7:20AM the Aussie was buying $US90.05 cents, 58.15 Pence Sterling, 86.77 Yen and 67.53 Euro cents.
Economic news
The Australian Bureau of Statistics will release its monthly labour force figures this morning. The unemployment rate is expected to have risen to a four-year high in July as the rate of hiring in the mining sector slows. Economists are tipping the unemployment rate to rise to 5.8 per cent, from 5.7 per cent in June.
Company news
Rio Tinto Limited
(ASX:RIO) will get the ball rolling on earnings season today when it releases its first half results. Analysts are tipping sharp falls in profits due to weaker commodity prices. Some analysts say underlying earnings could come in at $US4.23 billion, down 18.6 per cent on last year. Shares in Rio Tinto fell 2.1 per cent yesterday to close at $58.60.
Telstra Corporation Limited
(ASX:TLS) is expected to report earnings growth today when it reports its full-year profit result. Revenue for the full year is expected to climb about 2 per cent, in line with the telco's forecasts of low single-digit growth, to just over $25 billion. Analysts put profit for the full year at $3.77 billion. Shares in Telstra dropped 1.18 per cent yesterday to close at $5.01.
Commodities
Gold is up $2.80 to $US1,285 an ounce for the December contract on Comex. Silver is down $0.02 to $19.51 for September. Copper is up $0.01 at $3.18 a pound. Oil is down $0.93 at US$104.37 a barrel for September light crude in New York.
