The Australian share market is expected to dip in early trade, defying a global rally in overnight trade on news that Larry Summers bowed out of the running to lead the US Federal Reserve.
Mr Summers’ withdrawal – which has been seen as an indication the Fed won’t hurry the process of pulling back on its stimulus efforts – also sparked a rally in Treasuries, gold and European stocks, while also pushing the greenback lower against a stronger Australian dollar.
US Investors are likely to be transfixed on the Federal Reserve's two-day policy committee meeting ending Thursday morning our time, after which it is expected the central bank will announce it plans to start reducing its $85-billion-a-month bond purchase programs.
US economic news
Wall Street surged as investors shook off a disappointing reading on manufacturing activity in the New York region. The New York Federal Reserve's September Empire State index fell to 6.29 from 8.24 in August. It was expected to rise to 8.5. Meantime industrial production rose 0.4 per cent in August, in line with expectations.
Figures
The Dow Jones Industrial Average jumped 119 points to close at 15,495, the S&P 500 added 10 points to close at 1,698 and the NASDAQ dipped 4 points to close at 3,718.
European also rallied: London’s FTSE gained 39 points, Paris lifted 38 points and Frankfurt soared by 104 points.
Asian markets were mixed with Japan closed for bank holiday: Hong Kong’s Hang Seng lifted 337 points, and China’s Shanghai Composite was 5 points lower.
The Australian share market soared yesterday, after hitting a fresh five year high as investors toasted news that Larry Summers won’t run for the US Federal Reserve’s chairman seat. The S&P/ASX 200 index closed 28 points up to finish at 5,248. On the futures market the SPI is 17 points down.
Currencies
The Australian dollar remains above 93 US cents following that news about Larry Summers as well as easing tensions in Syria. At 7:30AM the Aussie was buying $US93.29 cents, 58.69 Pence Sterling, 92.41 Yen and 69.96 Euro cents.
Economic news
The Australian Bureau of Statistics will release its new motor vehicle sales for August and the RBA will release its board meeting minutes for September.
Company news
The tussle for control over Billabong International Limited
(ASX:BBG) continues, as US hedge funds Oaktree Capital and Centerbridge Partners secure a senior surf industry executive who would become head of Billabong if their offer for the company is approved, according to media reports. The hedge funds have pitched a $395 million recapitalisation plan that is up against a $325 million debt and equity proposal from an Altamont consortium. Shares in Billabong lifted 6.98 per cent yesterday to close at 46 cents.
Leighton Holdings Limited
(ASX:LEI) subsidiary John Holland Group has been awarded $257 million worth of rail construction work for Gina Rinehart's Roy Hill iron ore project in Western Australia's Pilbara region. The company says the heavy haulage track work will connect the Roy Hill mine site to Port Hedland and take around two years to complete, beginning next month. Shares in Leighton fell 1.86 per cent yesterday to close at $19.50.
Ex-dividend
Southern Cross Electrical Engineer Limited
(ASX:SXE)
Commodities
Gold is up $9.20 to $US1,318 an ounce for the December contract on Comex. Silver is up $0.29 to $22.01 for December. Copper is up $0.02 at $3.22 a pound. Oil is down $1.62 at US$106.59 a barrel for October light crude in New York.
