US stocks sink amid political turmoil: Aus shares to drop at open

Market Reports

by Anna Napoli

Australian shares are set to drop at the open following falls on US and European markets overnight. The financial sector dragged on the market with Morgan Stanley, Goldman Sachs and JP Morgan all shedding over 3 per cent. The catalyst has been the political turmoil in Italy. Over the weekend Italy’s president stopped the formation of a coalition government that may have sought to leave the Euro. US treasury prices rose sharply as investors embraced safe-haven assets such as US government bonds. Meantime, US ten-year yields fell to 2.78 per cent.

Global oil prices ended mixed on Tuesday with investors continuing to focus on news that major oil producers will lift oil supplies. Brent crude rose by US 9 cents while tapis was down around 1 and a half per cent.

US economic news:

The measure of home prices rose by 1 per cent in March versus a forecast  of 0.7 per cent home prices are up 6.8 per cent on the year. Meantime, U.S. consumer confidence rose in May to a three-month high as a strong job market helped bigger after-tax pay cuts and strong jobs market helping to sustain confidence.

Local economic news:

Back home we can expect data on building approvals today. Approvals to build new homes rose by 2.6 per cent in March.  The value of building approvals hit a record high of $126.4 billion over the year.

Markets:

Wall Street closed lower yesterday. The Dow Jones Industrial Average lost 1.6 per cent to close at 24,361, the S&P 500 fell 1.2 per cent to close at 2,690 and the NASDAQ lost 0.5 per cent to close at 7397.

European markets closed lower yesterday: London’s FTSE dropped 1.3 per cent, Paris fell 1.3 per cent and Frankfurt lost 1.5 per cent.

Asian markets closed lower yesterday: Tokyo’s Nikkei closed 0.6 per cent lower, Hong Kong’s Hang Seng dropped 1.0 per cent, and China’s Shanghai Composite lost 0.5 per cent.

Taking all of this into equation, the ASX futures are pointing to a 45 pts drop. Yesterday, the Australian share market closed higher with the S&P/ASX 200 Index gaining 10 points to close at 6014.

Company news

Home retailer Adairs (ASX:ADH) has announced that non-executive director David MacLean has sold 1.6 million shares in the company.

He has advised the board that the decision to sell the shares resulted from a decision to diversify his personal portfolio.

The company says he has no intention to further reduce his shareholding.

Shares in Adairs (ASX:ADH) closed 1.8 per cent higher to $2.29 yesterday.

Ex-dividends

One company is going ex dividend today.

Aurora Dividend Income Trust (ASX:AOD) is paying 0.3c fully franked

Currencies

One Australian Dollar at 7:40AM was buying US75.06 cents, 56.64 Pence Sterling, 81.54 Yen and 65.05 Euro cents.

Commodities

Iron ore futures are pointing to a 0.5 per cent gain.
Gold has lost $5.80 to $US1303 an ounce.
Silver has dropped 18c to $US16.37 an ounce.
Oil was down $1.01c to $US66.87 a barrel.

Cryptocurrencies

The three most traded cryptocurrencies are trading higher: Bitcoin has added 4.2 per cent to US$7503, Ethereum has gained almost 9 per cent to US$568 and EOS has risen almost 2 per cent to US$12.23.