Dollar weaker as Wall St helps greenback

Source: AFP

THE Australian dollar has opened below 99 cents as another rally on Wall Street boosted the greenback.

At 7am AEST, the local currency was trading at 98.92 US cents, down from yesterday's close of 99.80 US cents, marking the weakest start to a session in 11 months.

HiFX senior dealer Dan Bell said a jump in the Dow Jones Industrial Average, to a record 15,215.25, buoyed the greenback, even though stronger risk sentiment has traditionally been a boon for the Australian dollar.

"The correlation between the US stock market and the Australian dollar has been breaking down over the last few months," he said.

"Investors are treating positive news in the US as ultimately positive for the US economy, which is actually supporting the US dollar and pushing up US bond yields."

US shares rose after Appaloosa Management hedge fund group boss David Tepper told CNBC the market could still soar higher.

With the greenback gaining strength, Mr Bell said, the Australian dollar was likely to hit 95 US cents in coming months, before falling to 85 US cents from next year.

"In the big scheme of things, the Australian dollar is still overvalued."

Traders did not appear phased by Treasurer Wayne Swan's Budget for 2013/14, which delivered a deficit of $18 billion for 2013/14, with a surplus forecast for 2016/17.

"That was pretty much as expected. I don't think it's given anyone too much of a surprise."

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Dollar weaker as Wall St helps greenback

Domestic economics under the microscope as the US maintains record highs. Commsec report

Source: AFP

THE Australian dollar has opened below 99 cents as another rally on Wall Street boosted the greenback.

At 7am AEST, the local currency was trading at 98.92 US cents, down from yesterday's close of 99.80 US cents, marking the weakest start to a session in 11 months.

HiFX senior dealer Dan Bell said a jump in the Dow Jones Industrial Average, to a record 15,215.25, buoyed the greenback, even though stronger risk sentiment has traditionally been a boon for the Australian dollar.

"The correlation between the US stock market and the Australian dollar has been breaking down over the last few months," he said.

"Investors are treating positive news in the US as ultimately positive for the US economy, which is actually supporting the US dollar and pushing up US bond yields."

US shares rose after Appaloosa Management hedge fund group boss David Tepper told CNBC the market could still soar higher.

With the greenback gaining strength, Mr Bell said, the Australian dollar was likely to hit 95 US cents in coming months, before falling to 85 US cents from next year.

"In the big scheme of things, the Australian dollar is still overvalued."

Traders did not appear phased by Treasurer Wayne Swan's Budget for 2013/14, which delivered a deficit of $18 billion for 2013/14, with a surplus forecast for 2016/17.

"That was pretty much as expected. I don't think it's given anyone too much of a surprise."

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Market opens weaker

May day holiday in Europe and US markets under pressure.

THE Australian market has opened lower as lacklustre Chinese manufacturing data impacts mining stocks.

IG market strategist Evan Lucas said the local market was being dragged down by the resources sector as commodity prices drop after disappointing economic data from China.

"The manufacturing data was a bit flat to slightly on the bottom-weak side which has seen commodities pull off and which has seen the materials sector pull back," he said.

The mining giants all opened lower. BHP Billiton fell 20 cents to $31.97, Rio Tinto dropped 36 cents to $54.67 and Fortescue lost two cents to $54.67. Oz Minerals dived seven cents, or 1.69 per cent, to $4.06 and Newcrest tumbled 20 cents, or 1.22 per cent, to $16.25.

The four major banks also had a negative start after recent gains. ANZ lost 15 cents to $31.54, National Australia Bank dropped 11 cents to $33.84, Westpac fell eight cents to $33.98 and Commonwealth Bank tumbled 27 cents to $72.68.

Flight Centre shares were up $1.74, or 4.56 per cent, to $39.91 after the travel company upgraded its full year guidance from $305 million to $315 million, to between $325 million and $340 million.

GrainCorp shares lifted six cents, or 0.47 per cent, to $12.87 after it announced due diligence regarding its takeover by Archer Daniels Midland (ADM) was completed.

US stocks tumbled yesterday following weak employment and manufacturing data, and as the Federal Reserve stuck to its aggressive economic stimulus program. The Dow Jones Industrial Average lost 138.85 (0.94 per cent) to 14,700.95.

KEY FACTS

* At 10.22am AEST today, the benchmark S&P/ASX200 index was down 21.1 points, or 0.41 per cent, at 5145.1 points.

* The broader All Ordinaries index was also down 21.4 points, or 0.42 per cent, at 5122.5 points.

* The June share price index futures contract was 24 points lower at 5,137 points, with 6796 contracts traded.

* National turnover was 296.4 million securities worth $466.95 million.

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Stocks weaker at noon

Investors in America are treading water ahead of jobs report.

THE Australian market is lower at noon as investors move in to take profits.

CMC Markets chief strategist Ric Spooner said the Australian market was lower as it continued to correct itself after recent rallies.

"Despite the mildly positive lead from overseas we're seeing general selling continuing today as investors continue to take a bit of profits," he said.

However, he said, in a reversal of recent weeks the big miners were performing well, while high yielding stocks were weaker. BHP Billiton gained 34 cents to $32.09, Rio Tinto jumped 65 cents to $55.25 and Fortescue added 1.5 cents to $3.565.

The Commonwealth Bank dived $1.11 to $66.99, Westpac tumbled 33 cents to $30.46, ANZ fell 30 cents to $27.73 and National Australia Bank lost 31 cents to $30.69.

Most of the major retailers were lower at noon despite figures released yesterday showing sales have risen strongly for a second straight month. Woolworths also tumbled 56 cents to $33.85, Wesfarmers fell 43 cents to $40.01 and David Jones lost 10.5 cents to $2.895. However Myer gained three cents to $2.95.

KEY FACTS

* At 12.01pm AEDT today, the benchmark S&P/ASX200 index was down 20.5 points, or 0.42 per cent, to 4893 points.

* The broader All Ordinaries index was down 18.3 points, or 0.37 per cent, to 4901 points.

* The June share price index futures contract was down 21 points to 4891 points, with 15,977 contracts traded.

* National turnover was 603.5 million securities worth $1.85 billion.

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$A weaker as US stocks fall

Australian Money Source: Supplied

THE Australian dollar is slightly lower as weak US consumer sentiment figures and concerns about the Cyprus bank bailout weighs on market sentiment.

At 0700 AEDT today, the local unit was trading at 103.58 US cents, down from 103.69 cents on Friday.

Since 1700 AEDT on Friday, the Australian dollar traded between 103.34 US cents and 104.17 cents.

As a condition for a 10 billion euro bailout for Cyprus, a 9.9 per cent levy will be imposed on deposits of more than 100,000 euros in the island's banks.

US consumer confidence figures releases in Friday in the United States showed a fall in February to its lowest level since December 2011.

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$A weaker as US stocks fall

Australian Money Source: Supplied

THE Australian dollar is slightly lower as weak US consumer sentiment figures and concerns about the Cyprus bank bailout weighs on market sentiment.

At 0700 AEDT today, the local unit was trading at 103.58 US cents, down from 103.69 cents on Friday.

Since 1700 AEDT on Friday, the Australian dollar traded between 103.34 US cents and 104.17 cents.

As a condition for a 10 billion euro bailout for Cyprus, a 9.9 per cent levy will be imposed on deposits of more than 100,000 euros in the island's banks.

US consumer confidence figures releases in Friday in the United States showed a fall in February to its lowest level since December 2011.

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Australian shares weaker at noon

Indecisive Italian elections drag US shares lower.

THE Australian sharemarket is weaker at noon as uncertainty about the Italian election result helped weigh down a soft market.

At 12pm AEDT today, the benchmark S&P/ASX200 index was down 38.1 points, or 0.75 per cent, at 5017.7 points, while the broader All Ordinaries index was down 38.3 points, or 0.76 per cent, to 5034.4 points.

On the ASX 24, the March share price index futures contract was down 41 points at 5001 points, with 18,474 contracts traded.

The local market followed Wall Street lower, after former Italian prime minister Silvio Berlusconi's centre-right coalition appeared to be ahead in the Senate race, but only slightly behind in the lower house.

Still, RBS Morgans senior private client adviser Bill Chatterton said the uncertainty over the Italian election result was already factored in.

"It was always going to be uncertain so I don't think it was any new news, really," he said.

The Australian market's fall in the lead-up to noon has also been half the drop experienced on Wall Street, as investors cashed in on recent local gains.

"We're more resilient certainly than the US market," he said. "We're seeing a little bit of profit taking coming out of the market at the moment."

The big banks were in weaker territory, with the Commonwealth Bank shedding 18 cents to $65.57, Westpac losing eight cents to $30.29, ANZ relinquishing seven cents to $28.40 and National Australia Bank letting go of 14.5 cents to $30.13.

QBE Insurance shares fell 49 cents, or 3.61 per cent, to $12.55, after announcing an annual profit growth of eight per cent, lower than previously forecast due to severe droughts and storms in the United States. QBE made a net profit of $US761 million ($741.97 million) in the year to December 31, up from $US704 million in the previous corresponding period.

Seven Group Holdings shares rose 24 cents, or 2.39 per cent, to $10.29 after flagging a rise of up to 20 per cent in full year profit.

Meanwhile, Virgin Australia shares lost 1.5 cents, or 3.45 per cent, to 42 cents, after revealing its first half profit has slumped by 56 per cent.

The Dow Jones Industrial Average fell 216.40 points, or 1.55 per cent, to 13,784.17, marking the index's biggest single-day drop since November. The broad-based S&P 500 lost 27.75, or 1.83 per cent, to 1487.85, while the tech-rich Nasdaq Composite Index sank 45.57, or 1.44 per cent, to 3116.25.

National turnover at 12.07pm AEDT was 815.99 million securities worth $1.703 billion with 277 up, 560 down and 335 unchanged.

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Dollar weaker on Italy stalemate

THE Australian dollar is more than half a US cent lower as concerns about Italy's political stalemate continue to weigh on markets.

At 12pm AEDT today, the currency was trading at 102.27 US cents, down from 102.83 US cents yesterday. It fell to 102.00 US cents early this morning, its lowest level since early October.

Westpac chief currency strategist Robert Rennie said markets were concerned about the results of Italian elections, which failed to produce a clear winner. Centre-left Democratic Party leader Pier Luigi Bersani scraped a razor-thin victory in the lower house of parliament but no party was able to win a majority in the senate.

"We've been very much dominated by offshore events," Mr Rennie said. "The suspense that now exists in Italy as we wait to see whether a coalition can be formed and, if so, how sustainable it is is something that continues to weigh."

Mr Rennie said that while developments in Italy and in the US, where automatic budget cuts are due to come into effect in March, unless Congress intervenes, would continue to weigh on the currency.

But he said that, with the currency now close to 102 US cents, it was likely to gain support from institutional investors.

"We haven't spent a great deal of time below that level in the past six or eight months so you would naturally expect to see some corporate demand and central bank demand for the Aussie," he said.

He said the key local driver for the currency over the next few days would be the release of official capital expenditure data for the December quarter tomorrow.

Meanwhile, Australian bond futures were stronger at noon. At 12pm AEDT today, the March 10-year bond futures contract was trading at 96.670 (implying a yield of 3.330 per cent) 96.645 up from (3.355 per cent), yesterday afternoon. The March three-year bond futures contract was at 97.280 (2.720 per cent), up from 97.260 (2.740 per cent) previously.

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Shares open weaker as resources fall

Mixed housing data and large slides in commodity prices pushing US stocks lower.

THE Australian market is weaker as falling commodity prices hit key resources stocks and the US Federal Reserve hints at a possible policy change.

At 10.22am AEDT today, the benchmark S&P/ASX200 index was down 30.9 points, or 0.6 per cent, at 5067.9 points, while the broader All Ordinaries index was down 32.1 points, or 0.63 per cent, to 5082.3 points.

On the ASX 24, the March share price index futures contract was down 25 points at 5048 points, with 10,535 contracts traded.

A computer glitch at the Australian Securities Exchange delayed the reporting of key market indices at the start of trade today, but the problem was resolved by 10.30am AEDT, brokers said.

IG Markets market analyst Stan Shamu said key resources stocks had tumbled after minutes from the US Federal Reserve's most recent monetary policy meeting suggested its quantitative easing may be halted.

This, in turn, affected key commodity prices like gold, and caused the Australian materials sector to open 2.65 per cent weaker.

"There's concern that without quantitative easing the US dollar will regain strength," Mr Shamu said.

Speculation about a major hedge fund pulling out of commodities also contributed to the selling of resources sector shares.

"We don't know exactly what the source was, but it was credible enough to run through," Mr Shamu said.

Mining giant BHP Billiton led the market lower, falling 2.9 per cent, or $1.12, to hit $37.53 at 10.40am AEDT.

Rival Rio Tinto was 2.59 per cent, or $1.80, weaker at $67.60.

Origin Energy's shares fell 7.71 per cent, or 95.5 cents, to $14.25 at 10.59am AEDT after it said it feared its full year earnings would drop by up to 15 per cent after its interim profit fell 34 per cent to $524 million.

Qantas gained 4.33 per cent, or seven cents, after it said it had nearly tripled its first half profit to $111 million as it begins to realise the benefits of recent tough decisions.

Meanwhile, troubled newspaper publisher APN News and Media reported a $455.8 million full year loss, down from its $45.1 million loss in the previous corresponding period.

Its shares rose one cent to 28 cents by 10.57am AEDT.

National turnover at 10.26am AEDT was 344.0 million securities worth $865.0 million.

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