Outlook: Aus shares gear up for RBA rate call

Market Reports

Following record highs on Wall Street the SPI is pointing to a slightly firmer start for the Australian share market ahead of the Reserve Bank of Australia’s (RBA) June interest rate decision this afternoon. Australia’s key cash rate is expected to remain on hold at a historical low of 2.5 per cent for the ninth straight month despite the dollar remaining high against a significant drop in the iron ore price. 
 
Across global markets Europe closed mainly higher while the Dow and S&P 500 continued to hit record highs even after a piece of manufacturing data was released incorrectly. The Institute for Supply Management initially reported a weaker than expected dip in May manufacturing activity but later released a corrected statement which pushed US stocks higher. 
 
Global markets
 
Wall Street closed mixed on Monday: The Dow Jones Industrial Average added 26 points to close at 16,744, the S&P 500 added 1 point to close at 1,925 and the Nasdaq lost 5 points to close at 4,237.
 
European markets also started the week mixed: London's FTSE 100 gained 20 points, France's CAC 40 lost 4 points and Germany's DAX gained 7 points.
 
Asian markets closed mixed on Monday: Japan’s Nikkei lifted 304 points, Hong Kong’s Hang Seng lifted 72 points, and China’s Shanghai Composite lost 1 point.
 
The Australian share market gained momentum over Monday and closed at session highs: The S&P/ASX 200 index advanced 26 points yesterday to end at 5,518.5. On the futures market the SPI is pointing 6 points higher. 
 
Currencies 
 
Ahead of today’s interest rate decision the Australian dollar at 7:20am was buying $US0.9244, 55.22 Pence Sterling, 94.66 Yen and 68 Euro cents.
 
Economic news due out today 
 
Reserve Bank of Australia: June board meeting and interest rate decision
 
Dun and Bradstreet: Business expectations survey
 
Australian Bureau of Statistics: Retail trade data for April, Balance of Payments and International Investment Position for the March quarter and Government finance statistics for the March quarter 
 
Company news 
 
Responding to media speculation UGL Limited (ASX:UGL) has confirmed it is pursuing the divestment of its global property services business DTZ. The engineering company has denied a deal has been done but says it has received proposals to acquire the business and all options are being considered, including a demerger of DTZ. Media reports yesterday suggested UGL is in final talks to sell DTZ to US private equity group TPG for $1.2 billion and the deal could be made public as soon as this week. Shares in UGL spiked following the announcement to end Monday 8.23 per cent stronger at $7.10. 
 
Origin Energy Limited (ASX:ORG) has flagged a $1 billion equity raising to partially fund its purchase of natural gas resources in the Browse Basin off the north-west of Western Australia. The energy company has inked a deal with Karoon Gas Australia Limited (ASX:KAR) to buy its entire 40 per cent stake in two exploration permits for up to $860 million. US oil company ConocoPhillips is the operator with a 40 per cent interest while the remaining 20 per cent stake is held by PetroChina Co. While shares in Karoon Gas surged 42.7 per cent by close shares in Origin Energy closed 3.58 per cent lower following the announcement to end Monday at $14.55. 
 
Ex-dividends today

Alliance Aviation Limited (ASX:AQZ) paying a 3.6 cent fully franked dividend
CSR Limited (ASX:CSR) paying a 5 cent unfranked dividend 
 
Ex-dividends tomorrow
 
Kathmandu Holdings Limited (ASX:KMD) paying a 2.4 cent fully franked dividend
Ruralco Holdings (ASX:RHL) paying a 8 cent fully franked dividend
Technology One (TNE) paying a 1.95 cent fully franked dividend
WDS Limited (WDS) paying an 2 cent fully franked dividend
 
Commodities 

Gold has continued to head south and lost $2.00 to $US1,244 an ounce for the August contract on Comex. 
Silver has added $0.06 to $18.74 for July. 
Copper has firmed $0.05 to $3.17 a pound. 
Oil has dipped $0.24 to $US102.47 a barrel for July light crude in New York.

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