Outlook: ASX set to open higher

Following a new record high for the S&P500 which closed just over 2000 points and broadly positive leads from European markets, the Australian share market looks set to open higher. However, a further drop in the iron ore price overnight could weigh on the market somewhat. 

US economic news

More US Regional Reserve Bank heads are continuing to urge for a rise in the Fed’s emergency lending rate according to minutes released on Tuesday. 

 

Markets

Wall Street closed up yesterday: The Dow Jones Industrial Average gained 0.2 per cent to close at 17,107, the S&P 500 added 0.1 per cent to close over 2000 for the very first time and the NASDAQ lifted 0.3 per cent to close at 4,571.

 

European markets also closed higher: London’s FTSE up by 0.7 per cent, Paris advanced 1.2 per cent and Frankfurt improved 0.8 per cent.

 

Asian markets closed lower: Tokyo’s Nikkei dipped 0.6 per cent, Hong Kong’s Hang Seng shed 0.4 per cent, and China’s Shanghai Composite slid 0.99 per cent.

 

The Australian share market closed almost flat yesterday: The S&P/ASX 200 Index closed 3 points up to finish at 5,638. On the futures market the SPI is 9 points up. 

 

Currencies

The Australian Dollar at 7:30AM was buying 93.07 US cents, 56.29 Pence Sterling, 96.89 Yen and 70.7 Euro cents.

 

In economic news, due out today from the Australian Bureau of Statistics is construction work done for the June quarter. 

 

Company news

Cover-More Group Limited (ASX:CVO) exceeded its full year forecast and doubled its forecast dividend on the back of a 20 per cent hike in sales. The travel insurer, which listed in December, also produced 27 per cent growth in earnings, 9.7 per cent higher than in the prospectus forecast. CEO Peter Edwards said, ‘It’s pleasing to see the investment we have made in technology and innovation over the past three years is now making a significant contribution to the group’s growth’. Diversification into e-commerce and medical assistance business also helped offset a softening in outbound leisure travel after the Federal budget was released. The board declared a final dividend of 7.2 cents per share fully franked, up from the prospectus forecast of 3.6 cents per share. Shares in Cover-More Group closed 7.07 per cent stronger yesterday at $2.12. 

 

All eyes are on travel agent Flight Centre Travel Group Limited (ASX:FLT) ahead of its earnings release today. The company has been through some highs and lows this year with the stock price tumbling almost 20 per cent from earlier highs of over $55. A joint venture with Vietnam’s largest privately owned travel and hospitality group lent some confidence back to the business after Flight Centre downgraded its full year guidance to between $370 million and $380 million back in June. The downgrade was attributed to disappointing travel results in Canada and a tougher environment in the Australian leisure business. Shares in Flight Centre closed 0.4 per cent higher yesterday at $47.43. 

 

Commodities

Gold is up $6.30 to $US1,285 an ounce for the December contract on Comex. Silver is up 3 cents to $19.39 for September. Copper is down 3 cents at $3.19 a pound. Oil is up 51 cents at US$93.86 a barrel for October light crude in New York.