It was a cautious session on Wall Street, weighed down by investors’ concerns about the prospects of corporate tax cuts being passed. (Reuters: Brendan McDermid)
Australian shares are expected to dip at the open, while Wall Street provided a somewhat uninspiring lead.
Market snapshot at 8:20am AEDT:
- ASX SPI 200 futures -0.4pc at 6,012, ASX 200 (Monday’s close) -0.1pc at 6,022
- AUD: 76.25 US cents, 65.34 Euro cents, 58.12 British pence, 86.61 Japanese yen, $NZ1.10
- US: Dow Jones +0.1pc at 23,440, S&P 500 +0.1pc at 2,585, Nasdaq +0.1pc at 6,758
- Europe: FTSE -0.2pc at 7,415, DAX -0.4pc at 13,074, Euro Stoxx 50 -0.4pc at 3,578
- Commodities: Brent crude -0.7pc at $US63.11/barrel, spot gold +0.1pc at $US1,278/ounce, iron ore flat at $US62.19/tonne
What’s weighing on Wall Street?
The US stock market closed slightly higher, with the Dow Jones, S&P 500 and Nasdaq all up by 0.1 per cent.
There were a number of factors which dampened the performance of the market overnight.
One of them was multinational General Electric, which provided weaker-than-expected guidance.
The company slashed its quarterly dividend and profit outlook in half, and announced it would narrow its focus to focus on the aviation, energy and healthcare sectors.
In addition, GE said it would cut 25 per cent of its corporate staff, which will result in 1,500 job losses at its Boston headquarters.
These downbeat announcements resulted in GE’s share price tumbling by 7.2 per cent, making it a significant drag on the Dow Jones index.
Market sentiment has also been on edge lately, as investors question whether US corporate tax cuts will happen at all this year.
Even if the Republicans introduce these new laws, the tax cuts might not take effect until 2019, according to the US Senate’s version of the tax bill.
In contrast, the House of Representatives has a competing version of the bill — one in which the tax cuts would be implemented immediately.
Australian market today
ASX futures have fallen 0.3 per cent, which indicates the Australian share market is likely to open lower.
In economic news, NAB will release the results of its October business survey, and another solid reading is expected.
In September, business confidence rose by two points to +7, while business conditions fell one point to +14.
The Australian dollar slipped by 0.5 per cent against the greenback, and is buying 76.25 US cents.
However, it rose by 0.2 per cent to 58.1 British pence. The UK currency has weakened over growing concerns about Theresa May’s future as prime minister and her ability to deliver on Brexit.
“Suffice to say that in the absence of progress within UK political circles this week and next toward offering up a higher Brexit divorce bill, Sterling could be down another 5 per cent or more by month end,” NAB’s head of foreign exchange strategy Ray Attrill forecast.
“If instead Mrs May does somehow manage to pull a proverbial rabbit out of the hat, it will be 5 per cent or more stronger.
“The pound will be a very sharp toy in the coming few weeks.”
In addition, China will release key economic data today including industrial production, capital expenditure and retail spending. Any unexpected weakness in these results may have an impact on Australian currency.