Thursday: ASX to tumble at start of trade

Market Reports

by David Chau

The Australian stock market will open lower this morning, due to weak leads overseas.

In New York, Wall Street finished mostly lower overnight – with the NASDAQ being the only index which posted a gain, and the Dow Jones finally snapping its seven-day winning streak.  It seems the post-US election rally is slowing down. Technology shares were the best performers, while financials and energy were the weakest performers.

Over the last week, US Treasury yields have increased upon expectations that President-elect Donald Trump’s plans to increase infrastructure spending will boost US inflation. The Federal Reserve is also expected to raise interest rates in December, with the market pricing in that probability at more than 90%.

The Australian dollar has continued to weaken against the US greenback. It sunk to a two-month low overnight, falling nearly 1%, and has finally crossed the US 74-cent mark.

US economic news

The Bureau of Labor Statistics has released October figures for its Producer Price Index. The figures show that last month, there was no change in the price of finished goods and services sold by producers. But looking back at the September figure, the Index rose by 0.3%.

The Mortgage Bankers Association revealed that the total number of mortgage applications in the US fell 9.2% over the last week. This was due to a sharp and fast rise in average interest rates for borrowing over the previous week.
Markets

Markets

Wall Street finished mixed overnight: The Dow Jones lost 0.3 per cent to close at 18,868, the S&P 500 is down 0.2 per cent at 2,177 and the NASDAQ gained 0.4 per cent at 5,295.

European markets finished lower: London’s FTSE slipped 0.6%, Paris lost 0.8%, and Frankfurt is down 0.7%.

Asian markets were mixed: the Nikkei has risen 1.1%, the Hang Seng is down 0.2%, and the Shanghai Composite slipped 0.1%.

The Australian share market closed flat yesterday: The ASX 200 closed 1.5 points higher to finish at 5,328. This morning, on the futures market the SPI has slipped 13 points.

Currencies

The Australian Dollar after 8.30am was buying $US74.82, 60.17 Pence, 81.63 Yen and 69.98 Euro cents.

Local economic news

The Australian Bureau of Statistics will release labour force and unemployment data for October.

Company news

Wesfarmers (ASX:WES) has issued a statement, responding to recent media speculation that the company is planning to sell its coal assets. Wesfarmers says that it’s evaluating all strategic options for its Resources business – including operational and divestment initiatives. The company also confirmed that it has sought expressions of interest from external parties who may want to acquire its coal assets. Shares in Wesfarmers closed 1.23% higher at $41.

Navitas (ASX:NVT) has appointed Tracey Horton as its new chairman. Its current chairman, Harvey Collins has decided to step down after 10 years in the role. Also, Navitas’ chief executive, Rod Jones, has said that, despite Donald Trump’s tough stance against immigration in the US, his company’s student enrolments will not be affected. However, he did admit there was evidence of delays for international students waiting for their visas in the lead-up to last week’s US election. Shares in Navitas closed 1.2% higher at $5.04.

Commodities

Gold has slipped $3.30 to $US1,225 an ounce.
Silver is down $0.08 to $16.96.
Copper has lost $0.04 at $2.47 a pound.
Oil has slipped $0.35 to $46 per barrel.