The Fed’s mixed signals; oil declines: ASX to open flat

Market Reports

by David Chau

The Australian share market is set to open flat this morning.

US equities markets will provide a weak lead due to their lower finish overnight.  Energy stocks slipped, along with oil prices. This bearish sentiment was partially due to comments made by the Iranian vice president, who spoke of plans to boost Iran's oil supply to regain market share.  On the other hand, losses were offset by investors’ expectations that oil production will be cut following the next OPEC meeting.

Against the background of the Presidential Election, the US Federal Reserve seems to be giving mixed signals, adding to the climate of uncertainty. Overnight, the Fed’s Vice Chairman, Stanley Fischer, said that the US is "very close" to its inflation and employment targets. However, Fischer also warned that maintaining low interest rates could result in longer and deeper recessions. This is contrast with what Fed Chair, Janet Yellen, said last Friday – that it might be useful for the Fed to maintain low interest rates in order to run a “high pressure economy”.


The Dow Jones Industrial Average lost 0.3 per cent to close at 18,086, the S&P 500 was down 0.3 per cent to close at 2,127 and the NASDAQ slipped 0.3 per cent to close at 5,200.

European markets also finished lower: London’s FTSE was down 0.9%, Paris lost 0.5 per cent and Frankfurt slipped 0.7 per cent.

Asian markets closed mixed: Nikkei gained 0.3 per cent, the Hang Seng lost 0.8 per cent, and the Shanghai Composite was down 0.7 per cent.

The Australian share market closed lower yesterday: The ASX 200 closed 45 points lower to finish at 5,389. On the futures market the SPI is up 3 points.


The Australian Dollar at 7:30AM was buying $US76.25 cents, 62.63 Pence, 79.22 Yen and 69.34 Euro cents.

Company news

Global education company, Navitas Ltd (ASX:NVT), has extended service contracts with Curtin University for Curtin College, in Perth, and Curtin Singapore for one year each. The company says these extensions will give them more time to negotiate long term agreements regarding wider potential strategic initiatives. Shares in Navitas closed 0.94% lower at $5.28.

The Monadelphous Group (ASX:MND) has secured a construction contract worth $58 million. This contract relates to the Amuri irrigation scheme in New Zealand (north of Christchurch), and it requires the company to supply, install and commission a 130 kilometre water pipeline. Monadelphous expects this project to be completed by September, next year. Shares in Monadelphous closed 1.33% lower at $9.65.


Four companies are going ex-dividend today.

BlackWall Property Trust (ASX:BWR) will pay a dividend of 4 cents, unfranked.
Credit Corp Group (ASX:CCP) will pay 27 cents, fully franked.
Cadence Capital (ASX:CDM) will pay 4 cents, fully franked.
Future Generation (ASX:FGG) will pay 1 cent, fully franked.


Gold has gained 10 cents to $US1,256 an ounce.
Silver has gained 2 cents to $17.46.
Copper is down 1 cent to $2.11 cents a pound.
Oil is down $0.42 to US$50.33 per barrel.

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