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Tuesday, June 22, 2010

[cpsnewswire] [ASX Morning Update, June 22, 2010]

Shares slip as yuan optimism fades

 

June 22 (AAP) The Australian sharemarket has opened lower, after Wall Street slipped in late trade as optimism over China's move towards a more flexible yuan faded.

In early trade, the benchmark SS&P/ASX200 index fell 28.2 points, or 0.6 per cent, to 4584.4 and the All Ordinaries dropped 27 points, or 0.6 per cent, to 4605.7.

Global investors initially welcomed a move from the People’s Bank of China to allow the yuan to appreciate against the US dollar, CMC Markets analyst David Taylor said, but Wall Street was gripped by a bout of selling though when European investment giant BNP Paribas’ credit rating was downgraded by Fitch ratings.

"Given that a lot of China’s news was factored into our market yesterday, and BNP Paribas managed to spook Wall Street overnight, we could see some risk aversion returning to our market at the open," he said. "The lift in the US dollar overnight and a fall in the price of gold will also work against our market today."

Overseas shares

US stocks once again succumbed to late-day selling in light trading on Monday as hopes China's newfound dedication to yuan flexibility turned to doubts about the speed and magnitude of Beijing's intentions.

The Dow Jones Industrial Average fell 8.23 points, or 0.1 per cent, at 10,442.41. The Standard & Poor's 500 Index lost 4.3 points, or 0.4 per cent, at 1113.21. The Nasdaq Composite Index was down 20.71 points, or 0.9 per cent, at 2289.09.

European stocks posted firm gains boosted by China’s weekend pledge to let the yuan trade more freely, with the London FTSE 100 rising 0.9 per cent to 5299.11 points.

In Frankfurt the DAX index of leading German shares added 1.2 per cent to 6292.97 points and in Paris the CAC 40 index gained 1.3 per cent to 3736.15 points.

Dollar

The Australian dollar opened lower this morning, falling victim to profit-taking during the offshore session as enthusiasm waned for the prospect of a more flexibile Chinese currency.

At the start of trade, the dollar was buying $US0.8767, down from Monday’s close of $US0.8846.

Commodities

Oil prices ended higher after China’s announcement over the weekend that it would relax its currency’s peg to the US dollar, raising investor hopes of stronger energy demand.

New York’s main futures contract, light sweet crude for delivery in July, rose 64 US cents to settle at $US77.82 a barrel. The July contract expires on June 23. The August contract, which takes over as the most-active, benchmark contract, rose 35 US cents to settle at $78.61 a barrel. In London, Brent North Sea crude for August delivery rose 60 US cents to close at $US78.82.

China's announcement sparked expectations of higher demand for oil and other US dollar-priced raw materials that spurred global market rallies.

The booming export-geared Chinese economy is leading the global recovery from recession and is considered the key driver of energy demand as the world’s second-largest oil-consuming nation, after the United States.

Gold for August delivery fell $US17.60 to settle at $US1240.70 an ounce.

Silver for July delivery fell 37.6 US cents to settle at $US18.808 an ounce, while July copper settled up 5.8 US cents at $US2.942 a pound.

How we fared yesterday

Yesterday, the local sharemarket closed stronger. The benchmark S&P/ASX200 index ended up 60.7 points, or 1.3 per cent, at 4612.6, while the broader All Ordinaries index finished up 58.6 points, or 1.3 per cent, at 4632.7.

need2know:
- SPI futures are 30 points lower at 4569
- The dollar drops to 87.67 US cents
- Wall Street slips, with the Dow Jones down 0.1%
- In London, the FTSE rises 0.9%
- Oil climbs to $US77.82
- Gold falls to $US1240.70
- Stocks to watch on the ASX today

 

Link to Article

 

 

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"Mogi" Munkhdul Badral

CPS Mongolia

Email: mogi@cpsmongolia.mn

Mobile: +976-99996779

 

CPS Mongolia is a marketing arm of CPS Securities in Mongolia. CPS Securities is a Perth, Western Australia based ASX Licensed Financial Services Company. To trade ASX stocks, feel free to contact me at mogi@cpsmongolia.mn or +976-9999-6779.

 

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