The Market is down 55. ASX 200 Futures were down 37. The Dow Jones finished down 127 on below average volumes and below 15,000 again. The Dow was up 119 at best and down 141 at worst. The VIX Volatility Index was up 8.90% to its highest level since February. Worst sectors — consumer discretionary, utilities.
The German constitutional debate about the legality of the ECB’s OMT (Outright Monetary Transactions) program continues with the head of the Bundesbank arguing that Germany risks significant losses and grave damage to its credibility and ultimately it is the German tax payer who carries the risk. The relevance of the issue is that without German constitutional approval the OMT program would collapse. It is the OMT program that is credited with diffusing the debt crisis last July by underwriting European bond markets even though the program has never thus far had to be used.
European markets mixed — UK FTSE down 0.64%, Germany down 0.96%, France down 0.44%, Spain up 0.43%, Italy down 1.61%. The Eurozone’s annual industrial production number was -0.6%, which was below the previous reading of -1.6% but better than the forecast of +2.0%.
Metals mixed — copper up 0.80%, nickel down 1.81%, zinc up 0.62%, aluminium down 1.35%. Spot iron ore was unchanged at $110.90. Gold up $11.10 to $1388.10. Oil up 43c to $95.81.
Announcements and stories:
- Employment data better than expected — Unemployment rate fell 0.1% to 5.5% in May, consensus was for 5.6%. Total number of people employed rose 1,100 to 11,663 million in the month. The forecast was for total employment to fall 10,000 in May. The May participation rate was 65.2% down from 65.3% in April.
- Newcrest (NCM) — Lots of press about class actions post their profit warning last Friday with accusations that they selectively briefed brokers.
- ASX still in a trading halt — The institutional take up of their rights issue was strong (95%). The retail offer opens on June 17 and closes on July 5. At the moment you would take up the rights at $30 compared to the theoretical ex rights price of 3584c.
- Rio Tinto (RIO) — Has agreed to sell their US Eagle nickel and copper projects to Lundin Mining Corp for $US325 million as part of their restructure plans to reduce costs and increase shareholder returns. RIO is down 1.65% to 5196c.
- Suncorp Group (SUN) — Has sold a $1.6 billion non-core banking portfolio of corporate and property assets to Goldman Sachs at a weighted realisation of 60c in the dollar. SUN is down 1.69% to 1166c.
- Clough Ltd (CLO) — Has upgraded their financial year earnings forecast on the back of a strong quarterly performance and cost-saving measures. CLO is up 3.18% to 113.5c.
- Leighton Holdings’ (LEI) — John Holland unit has been awarded the construction of a new $180 million facility for the University of a Sydney Business School. LEI is down 2.62% to 1559c.