Outlook: ASX optimistic on ECB stimulus

Market Reports

Another set of record high closes on Wall street overnight have been spurred by the European Central Bank announcing a welcome stimulus package. The optimism looks set to flow onto Australian markets as activity has been hesitant awaiting the ECB’s announcement. The Australian dollar has gained on the news. 
 
It is a battle to avoid deflation that saw the European Central bank’s President, Mario Draghi, announce further reductions in the bank’s interest rates, in an unprecedented the move the bank’s deposit rate will shift into negative territory. The move will see commercial banks being charged to park their extra funds with the central bank in the hope that they’ll instead choose to lend it to the market. Meanwhile the central bank’s main interest rate was dropped even lower to 0.15 per cent, and while US style quantitative easing wasn’t adopted, it was made clear that the option was still on the table. To stimulate activity a package of cheap loans was made available to lenders worth up €400 billion.
 
Figures

Wall Street closed up yesterday: The Dow Jones Industrial Average gained 99 points to close at 16,836, the S&P 500 added 13 points to close at 1,940 and the NASDAQ gained 45 points to close at 4,296.
 
European markets closed mixed: London’s FTSE lost 5 points, Paris gained 48 points and Frankfurt gained 21 points.
 
Asian markets closed mixed: Tokyo’s Nikkei added 11 points, Hong Kong’s Hang Seng lost 42 points, and China’s Shanghai Composite added 16 points.
 
The Australian share market closed lower yesterday: The S&P/ASX 200 Index closed 8 points down to finish at 5,437. On the futures market the SPI is 10 points up. 
 
Currencies

Australian Dollar at 7:20AM was buying $US0.9337 cents, 55.54 Pence Sterling, 95.66 Yen and 68.35 Euro cents.
 
Economics news

The Australian Industry Group and Housing Industry Association is the performance of construction index (PCI) for May.
 
Company news
 
The fertilizer minerals company Rum Jungle Resources Limited (ASX:RUM) has appointed new management and boards positions as it prepares to shift from being an explorer to a potential producer. Chris Tziolis will become the new managing director and CEO, replacing David Muller who was also the company’s founder. Shares in Rum Jungle Resources closed down 4.44 per cent yesterday to $0.09
 
Venus Metals Corporation Limited (ASX:VMC) has had a positive drilling result at its Yalgoo Iron Ore project in Midwest Western Australia. The project’s first drilling hole has hit solid nickel and cobalt deposits in a target that’s seen to be rich in iron.  The tests have ensured further exploration of the site. Shares in Venus Metals closed 5 per cent up on the news $0.105.
 
To commodities: Gold is up $9.00 to $US1,253 an ounce for the August contract on Comex. Silver is up $0.29 to $19.08 for July. Copper is flat at $3.09 a pound. Oil is down $0.16 at US$102.48 a barrel for July light crude in New York.
 
Ex-dividends

Korvest (ASX:KOV) is $1 fully franked.