Australian shares lower despite strong run on Wall Street: Economy roundup

The Australian share market has opened lower today despite solid leads from Wall Street where the Dow broke 11,000 points overnight, dashing investors’ hopes the ASX200 would stay over the 5,000 point mark.

The benchmark S&P/ASX200 index was down 14 points or 0.3% to 4969.4 at 11.50 AEST, while the Australian dollar also retreated and is currently buying $US92c.

ANZ shares gained 0.6% to $25.51, with Commonwealth Bank shares losing 0.2% to $58.27. Westpac rose 0.3% to $27.91 as NAB lost 0.2% to $27.60.

In the United States, the Dow Jones industrial average broke the psychologically important 11,000 point barrier for the first time in nearly 19 months with strong first-quarter earnings in the financial, energy and industrial sectors pushing the results.

The Dow rose 8.62 points, or 0.08%, to 11,005.97 — its highest level since September 2008. The Standard & Poor’s 500 Index climbed 2.11 points, or 0.18%, to 1,196.48, and is now up 76.9% since its low in March 2009.

Also in the US, aluminium manufacturer Alcoa posted a fifth net loss out of the past six quarters yet its results were still in line with investor estimates.

The company said markets are beginning to improve with higher prices on the horizon, but chief executive Klaus Kleinfeld also said the company has lost a major customer and warned of strikes at its US locations.

“In the US we have about 5,350 employees that are covered under the USW (United Steelworkers union) master agreement. The master agreement expires on May 31 and we are currently in early negotiations,” he said on a conference call with analysts.

“Obviously we have a strong desire to reach a fair, as well as competitive labour agreement and to avoid any type of work stoppage. We’ve taken some steps to prepare in case the work stoppage would happen.”

The company announced a net first-quarter loss of $US201 million, or 20 cents per share, compared with a loss of US497 million during the previous corresponding quarter.

US considers more financial regulation

Also in the US, the Obama administration has moved forward on plans for tougher financial regulation, with legislation possibly even set for a vote next week.

Deputy US treasury secretary Neal Wolin said in a statement the global financial crisis should teach the financial sector that more regulation is needed.

“We will fight hard against any effort to weaken that legislation, and we will work to strengthen it further where we can… We cannot afford to let the memory of the crisis fade without taking action,” he said at the Council of Institutional Investors conference.

Last month the Senate Banking Committee approved legislation that would introduce new rules for derivatives, consumer financial products and would also introduce new measures to ensure that no firm is “too big to fail”.

Macarthur fight continues

Meanwhile, Macarthur Coal has said its key shareholders, POSCO and ArcelorMittal, have not yet told commodities company Noble Group how they intend to vote at a coming meeting regarding the proposed takeover of Gloucester Coal.

Noble Group, which is Gloucester’s largest shareholder, has said all three of Macarthur’s top shareholders have backed the deal. Macarthur has said ArcelorMittal, the company’s second-largest shareholder, has not yet decided whether it will back the plan.

ArcelorMittal was “supportive of Macarthur management in terms of management of competing bids and the various steps taken thus far”, Macarthur said in a statement to the ASX.

Australian employees are optimistic about the economic recovery, a new survey has revealed. The Towers Watson 2010 Global Workforce Study has found 56% of Australian respondents believe managers have been effective in working through the downturn, compared to a 48% response rate internationally.

The survey, which questioned 20,000 employees from 22 countries, also found Australian workers would enjoy more stability in their job ahead of promotions, and also could see themselves working for no more than three different companies during their entire working life.

The survey also found 66% would welcome chances to develop skills and abilities, but only 40% believe they are given that chance. Additionally, 64% said they would like higher pay, but only 29% believe they can achieve higher wages in their current jobs.

Oz Minerals signs exploration joint venture

In the mining industry, OZ Minerals has signed a joint venture with IMX Resources for a copper-gold exploration project.

The venture will enable IMX to explore and develop copper-gold projects in the Mt Woods region in South Australia, both companies said in a statement to the ASX. IMX managing director Duncan McBain said the deal will deliver financial benefits.

“The joint venture with OZ Minerals means a very significant increase in expenditure at Mt Woods, well in excess of what IMX could afford,” he said.

Meanwhile, the US ambassador to Australia has spoken out against the Rudd Government’s plans to introduce an internet filter, saying the administration’s goal to block child pornography can be achieved through other means.

On ABC’s Q&A program last night, Jeff Bleich said the internet must be free.

“We have been able to accomplish the goals that Australia has described, which is to capture and prosecute child pornographers…. without having to use internet filters.”

“We have other means and we are willing to share our efforts with them…. It’s an ongoing conversation.”