Australian shares down 2% after Wall Street slump: Economy Roundup

The Australian sharemarket has fallen over 2% this morning due to shocking leads on Wall Street overnight, where the Dow dropped over 3% following disappointing consumer confidence data.

Investors in the United States now fear there isn’t enough traction in the job market to sustain a long-term recovery. Debt fears in Europe are also exacerbating the problem.

The benchmark S&P/AX200 index was down 72 points or 1.66% to 4273.6 at 12.15 AEST, while the Australian dollar also recorded a fall to US84c.

AMP shares lost 2.6% to $5.18, while Commonwealth Bank shares lost 1.9% to $48.43. Westpac also fell 1.5% to $20.94 as NAB lost 1% to $23.16.

In the United States, a sell-off was triggered by a decision by the Conference Board to correct its leading economic index for China in April to a gain of just 0.3%, compared to the previously reported figure of 1.7%.

That figure came alongside another report from the CB which showed US consumer confidence had dropped in June after three months of rises.

“The day started with overseas – China – that was bad,” co-manager of trading at Themis Trading, Joe Saluzzi told Reuters. “Then it got banged out with the consumer confidence and it all just kind of went from there.”

The market closed at its lowest level since October, with the S&P500 falling to 1,050.47.

Back home, the AFR has reported that the Federal Government has approved a compromise offer for the RSPT, and is presenting it to large mining firms for discussion.

Apparently resources minister Martin Ferguson and deputy Prime Minister Wayne Swan are now seeking approval for the plan, which could apparently introduce a write-off for new capital expenditure and allow for the taxing point to be set closer to extraction.

Qantas says business improving

Airline giant Qantas has said business is improving, after reporting a 7.6% increase in group passenger numbers for the year ending May 2010.

Additionally, the company said the improvement was due to the “positive effect of the portfolio strategy”. Revenue passenger kilometers increased by 1.2% in May, with available seat kilometers dropping by 0.3%.

“At current rates, Qantas has 80% participation in favourable foreign exchange movements for the year,” the airline said.

As reported by Fairfax, the Cooper review of the superannuation system, which is set to be handed down today, will apparently introduce a compensation fund that could be used to reimburse super members in the event of operational mistakes or fraud.

Additionally, the review is also set to propose the APRA consult with the super industry to establish a set of standards that would help streaming reporting data and admin costs among companies.

Schemes wanting to run the new MySuper default fund will need to apply for a specific license from APRA.

Meanwhile, telco giant Telstra has defended its plans to offer content through Foxtel to broadband subscribers. In a submission to the ACCC, the company has apparently said the decision to offer the services had nothing to do with its stake in the pay-TV company.

However, rival telcos including iiNet and Optus, have said that potential customers could be lost due to the exclusive new deal.

Tatts announces UK downgrade

Gambling group Tatts has reduced the book value of its investment in British firm Talarius by $140 million following a budget announcement by the country’s new government.

Additionally, the company has reduced the value of software used in the Maxgaming Business in New South Wales.

“However, an emergency budget in the UK has delivered an increase in the UK VAT (value-added tax) and the immediate outlook for consumption spending in the UK is a little less certain than previously thought,” Tatts said in a statement to the Australian Securities Exchange.

“In these circumstances, the Tatts Group board considers that it is prudent to review the carrying value of the Talarius asset and the directors have decided to make a non-cash impairment charge of $140 million.”

“The revised carrying value of Talarius is $180 million.”

Overseas, European bankers will no longer be allowed to take home more than a third of their bonuses in cash, an EU politician has told Reuters.

“The bankers have shown that despite the crisis, they are not able to show self-restraint. This law will do it for them,” Arlene McCarthy, Labour-party lawmaker, told the news agency.

A spokesperson for the Spanish government also said it would be consulting with member EU states to announce a scheme.