The Australian share market is set to defy weak offshore leads and inch higher in early trade ahead of today’s RBA meeting and despite US stocks falling across the board amid a budget stalemate.
Wall Street declined amid growing investor worries that Congress will fail to reach a deal on budget legislation, forcing a partial government shutdown.
A more pressing concern for markets has been the looming debate over raising the debt ceiling. But investors say that while a US default would hit markets heavily, they expect Congress will reach an agreement.
US economic news
US stocks fell despite promising economic news. The Chicago-area purchasing managers index for September rose to 55.7 from 53 in August. That beat economists’ expectations.
Australian economic news
But all eyes will be on the home front today as the RBA holds its monthly board meeting. A survey of economists unanimously expect the central bank to hold rates today. It also releases its index of commodity prices for September.
Meantime, the Australian Bureau of Statistics is due to release retail trade data for August while the Australian Industry Group will put out its performance of manufacturing index for September.
Also due out is the RP Data Rismark Home Value Index for August and the HIA New home sales data for August.
Currencies
Today’s RBA’s decision will be the key driver for the Australian dollar today. Our currency is higher against a weaker US dollar this morning as America heads towards a government shut-down amid failing budget negotiations. At 7:20AM the Aussie was buying $US93.28 cents, 57.64 Pence Sterling, 91.68 Yen and 68.99 Euro cents.
Figures
Wall Street was in the red: The Dow Jones Industrial Average lost 129 points to close at 15,130, the S&P 500 dropped 10 points to close at 1,682 and the NASDAQ also fell 10 points to close at 3,771.
Political turmoil in Italy weighed on European stock markets: London’s FTSE shed 50 points, Paris lost 43 points and Frankfurt was down by 67 points.
Asian markets were also mostly lower, led by a 2 per cent slide in Japan's Nikkei Stock Average on the back of US worries and a strengthening yen.Tokyo’s Nikkei lost 304 points, Hong Kong’s Hang Seng dived 347 points, but China’s Shanghai Composite lifted by 15 points.
The Australian share market closed sharply lower yesterday, on those investor fears of the prospect of a US government shutdown. The S&P/ASX 200 index closed 88 points down to finish at 5,219. On the futures market the SPI is 5 points up.
Company news
Australia and New Zealand Banking Group
(ASX:ANZ) ANZ Bank is aggressively expanding its mortgage book at the quickest pace of the big four. New figures from the Australian Prudential Regulation Authority show ANZ's home loan book grew by 7.1 per cent in annualised terms during August. Shares in ANZ fell 2.35 per cent yesterday to close at $30.78.
Macquarie Group Limited
(ASX:MQG) has topped the league tables for advising in Australia and New Zealand mergers and acquisitions as well as initial public offerings. However, M&A deals are down. The value of takeovers was about $56 billion in the first nine months of this year compared with $71 billion for the same period last year. Shares in Macquarie dropped 2.02 per cent yesterday to close at $47.91.
Ex-dividend
Commodities
Gold is down $12.20 to $US1,327 an ounce for the December contract on Comex. Silver is down $0.12 to $21.71 for December. Copper is down $0.01 at $3.32 a pound. Oil is down $0.54 at US$102.33 a barrel for November light crude in New York.
