Shares flat despite more Wall Street gains, US credit rating under threat: Economy Roundup

The Australian sharemarket has opened flat this morning, despite a good result on Wall Street last night where stocks managed to reach another 29-month high.

The benchmark S&P/ASX200 index was down 24 points or 0.5% to 4781.9 at 12.20 AEST, while the Australian dollar continued to lose ground after the Government announced the new flood levy. The dollar remains at US88c.

NAB shares gained 0.3% to $24.67, as ANZ shares also rose by 0.1% to $23.61. AMP gained 1.3% to $5.39 as Westpac rose by 0.3% to $23.00.

But despite the negative result, strong reports on Wall Street, particularly in the tech sector as Microsoft record solid revenue growth, kept the Dow Jones Industrial Average up 4.39 points, or 0.04%, to 11,989.83. Netflix shares also rose to a record high after recording higher-than-expected results.

Moody’s warns on United States credit

Moody’s Investors Service has said that it may revise the outlook of its AAA credit rating for the United States in the next two years, saying it could change the outlook to negative.

In a new report, Moody’s says there are substantial risks on the credit rating caused by the extension of Bush-era tax cuts.

“Recent trends in and the outlook for government financial metrics in particular indicate that the level of risk, while still small, is rising and likely to continue to rise in the next several years,” the agency said in the report.

US jobless claims rise

The report over credit rates comes as jobless claims in the United States have continued to rise.

A new report from the Labor Department shows initial claims for state unemployment benefits grew by 51,000 to 454,000, seasonally adjusted. It was the largest weekly increase since September 2005.

ResMed profit up 31% in first half

Medical equipment manufacturer ResMed has reported first half net profit grew by 31% in the first half as demand for its sleep disorder products rose.

Net profit for the six months to December 31 was $US115.2 million, compared with $US88.1 million. Revenue rose by 13% to $US588 million.

ResMed chief executive Kieran Gallahue said growth was strong, particularly in the Asia-Pacific region.

“We expect the growth of all of our products to continue to benefit from the vastly under-penetrated and growing sleep-disordered breathing market,” Gallahue said in a statement.

“The findings from clinical studies continue to demonstrate the importance of diagnosing and treating sleep-disordered breathing (SDB).”

Coal & Allied profit up 20%

Coal & Allied, the miner managed by Rio Tinto, recorded profit after tax of $704 million for the 2010 calendar year, representing 20% growth. Revenue was down 10% to $2.09 billion, but managing director Bill Champion said the result was a solid one.

“These weather effects have so far continued into 2011,” Champion said.

“We expect markets for thermal and semi-soft coking coal to continue to remain strong in 2011, particularly in light of widespread industry supply constraints following recent floods in Queensland.”

Bernanke claims Goldman was close to collapse during financial crisis

US Federal Reserve chairman Ben Bernanke has said that 12 of the 13 most important financial groups in America were on the brink of collapse during the financial crisis.

According to notes released by the Financial Crisis Inquiry Commission, Bernanke said in a private meeting that these firms were in grave danger, including Goldman Sachs.

“If you look at the firms that came under pressure in that period… only one… was not at serious risk of failure,” Bernanke told the commission. “Even Goldman Sachs, we thought there was a real chance that they would go under.”

“As a scholar of the Great Depression, I honestly believe that September and October of 2008 was the worst financial crisis in global history, including the Great Depression.”

IMF warns nations to control deficits

The International Monetary Fund has warned the United States and Japan that it needs to create plans to cut budget deficits before borrowing costs begin to rise.

“In advanced economies where fiscal sustainability has not been a market concern, credible plans going well beyond 2011 need to be put in place urgently to lock in benevolent market sentiment,” the IMF said in its “Fiscal Monitor” report.

“Renewed market pressures in some advanced economies demand that these countries underline their commitment to their deficit targets and devise contingency plans to ensure that adjustment goals are met.”