RBA may cut rates; oil falls to $US40; ASX200 to open lower

Market Reports

by David Chau

The Australian share market will most likely open lower this morning – as investors will keep a close eye on the Reserve Bank, and whether or not it decides to cut interest rates later today.

Also, the local share market will be following weak leads from the US. Two out of the three Wall Street indexes finished lower overnight. Although tech stocks (like Apple and Alphabet) surged, energy stocks were (by far) the worst performer. The fall in energy shares was due to crude oil prices plunging overnight to $40 US per barrel – its worst month in a year.

US economic news

The purchasing manager's index (final) rose to 52.9 in July. A reading above 50 indicates expansion, as well as a healthy level of business conditions.

However, construction spending fell by 0.6% in June – in the public and private sectors. This was well below forecasts. In fact, economists were expecting construction spending to rise by 0.6%.

Markets

Wall Street closed mostly lower on Monday: The Dow Jones Industrial Average lost 0.2 per cent to close at 18,405, the S&P 500 lost 0.1 per cent to close at 2,171 and the NASDAQ gained 0.4 per cent to close at 5,184.

European markets closed lower: London’s FTSE was down 0.5 per cent, Paris lost 0.7 per cent and Frankfurt lost 0.1 per cent.

Asian markets closed mixed: Nikkei added 0.4 per cent, Hong Kong’s Hang Seng gained 1.1 per cent, and Shanghai Composite was down 0.9 per cent.

The Australian share market closed higher yesterday: The ASX 200 Index closed 25 points up to finish at 5,587. On the futures market the SPI is down 21 points.

Currencies

The Australian Dollar at 7:20AM was buying $US75.34 cents, 57.18 Pence Sterling, 77.16 Yen and 67.51 Euro cents.

Economic news

Later today, the RBA will announce whether or not it will cut interest rates.

Company news

Managed services provider, Citadel Group (ASX:CGL) has signed a 3-year deal with an Australian federal government agency. As for which agency, Citadel doesn’t say because of ‘strict confidentiality obligations’. Citadel says it will offer business advisory, design and information management services to this government agency.

Shares in Citadel are trading 4.38% higher at $5.48.

Payments solution provider, Emerchants Ltd (ASX:EML) is launching two new prepaid fuel cards in Italy. Emerchants, through its British subsidiary (Store Financial Services UK Ltd) has signed a 5-year deal with Italian company, TBS Europe SBL to launch these new products – and says it expects these products to contribute financially from the 2018 FY.

Shares in Emerchants are trading 2.37% down at $1.44.

Ex-dividends:
Asciano will pay a dividend of 87 cents, and Euroz Ltd will pay a dividend of 2.25 cents.  Both dividends are fully franked.

Commodities

Gold has gained $2.10 to $US1,360 an ounce for the December contract on Comex.
Silver has added $0.15 to $20.50 for September.
Copper has lost $0.02 to $2.20 a pound for September.
Oil has lost $1.54 to $US40.06 a barrel for September light crude in New York.