The Australian share market looks set to open weaker today after US stocks closed sharply in the red overnight, investors fleeing the US stock market following a big drop in consumer confidence and on mounting concern for the global economic outlook.
Wall St closed deep in the red on Tuesday with the S&P 500 falling to its lowest level in eight months on growing concern for the stability of European banks rattled the market again.
The Conference Board’s consumer confidence index slumped to a read of 52.9 in June from 62.7 in May. Expectations were for a fall to 62.
In more positive news, according to the S&P/Case Shiller Home Price Index of 20 major housing markets, home prices rose 3.8% in April compared to a year ago. The rise beat expectations for an increase of 3.4% for the month.
The Dow Jones Industrial Average dropped 268 points to close at 9,870. The S&P 500 Index fell 33 points to 1,041 and the NASDAQ lost 85 points to close at 2,135.
European stocks closed lower; London’s FTSE declined 157 points, Paris is down 143 and Frankfurt slipped 205.
Asian markets were weaker on Tuesday: Hong Kong’s Hang Seng is down 478, Tokyo’s Nikkei fell 123 and China’s Shanghai Composite lost 108 points.
The Australian share market closed lower yesterday. The S&P/ASX 200 Index declined 39 points to close at 4,346 and on the futures market the SPI200’s down 93 points. Turning to currencies and the Aussie Dollar at 7:35AM was buying 84.82 US cents, 56.28 Pence Sterling, 75.07 Yen and 69.57 Euro cents.
In economic news: The Department of Employment and Workplace Relations vacancy report is due out today, as well as RBA financial aggregates data for June, ABS job vacancies, and the Housing Industry Association new home sales for May.
In business news: Shares in iron ore miner Fortescue Metals Group Ltd (ASX:FMG) fell 2.49% to $4.31 on Tuesday. A report in The Australian newspaper this morning suggests that CEO Andrew Forrest had struck a secret deal on the government’s proposed resources tax with former PM Kevin Rudd. The report says that Mr Rudd and Mr Forrest had negotiated a compromise on the tax which included lifting the rate at which the 40% resources super profits tax came into play, from 6% to 15%, immediate write-offs for new capital and shifting the tax point for minerals to where they were mined out of the ground not after processing. Mr Forrest and other mining heads are now calling on new PM Julia Gillard to match or better this deal achieved with Mr Rudd. The paper reports Mr Forrest saying it would be a shame if the outcome of talks with Ms Gillard were anything less than what was achieved while Rudd was prime minister, otherwise his departure will be recognised as futile. Fortescue Metals Group pulled itself out of the red in fiscal 09 to post a profit of $626.13 million.
Shares in Spark Infrastructure Group (ASX:SKI) dropped 3.78% to $1.14 yesterday. The company has agreed to a $450 million refinancing of all of its existing bank facilities. The underwritten refinancing arrangements agreed to with NAB and Westpac, consist of new bank debt facilities totalling up to $450 million comprising two separate facilities, each with tenors of 3 and 4 years. As at June 29, the company’s net debt position was $337 million, with the company also holding two undrawn facilities of $50 million each which will be cancelled as part of the new arrangements. After completion of the refinancing, Spark says it will have no debt maturities until July/August 2013. Spark Infrastructure booked a $122 million profit for the 2009 calendar year.
To commodities, and the price of gold rose $3.80 to US$1,242 an ounce for the July contract on Comex. Silver is down 8 cents to US$18.59 and copper is 16 cents lower at $2.92 a pound.
And the price of oil fell $2.31 to US$75.94 a barrel for August light crude in New York.
