The Australian share market has opened higher today, led by positive results in the US and good results for mining shares.
The benchmark S&P/ASX200 index was up 22.5 points or 0.58% to 3896.5 at 11.50am AEST. The Australian dollar also increased to US80 cents.
Commonwealth Bank shares lost 0.9% to $37.73, while NAB lost 0.3% to $21.63. Westpac lost 1.1% to $19.47, while AMP gained 0.4% to $4.82.
Rio Tinto shares gained about 1.35% to $52.30 after it announced it has received acceptances for all the London shares offered in its $18.8 billion rights offer.
The company’s major shareholder, China-based Chinalco, said it has taken up its full entitlement to the offer, despite rumours the two companies’ relationship had broken down after Rio called off a larger equity partnership, instead making a deal with BHP.
In other resource news, the China Iron and Steel Association will now accept a reduction slightly lower than the 33% cut agreed by other Asian steel mills, an industry source has told Reuters.
The move is the first compromise on iron ore prices by Chinese steel mills. The CISA will now reportedly move to a bi-annual price setting scheme.
Also in the mining sector, BHP Billiton has temporarily shut its Perseverance nickel mine in WA due to rock falls – the second closure of the mine in a month.
The mine also suspended activity on 10 June when a miner was trapped 1000 metres underground after a rockfall, but was uninjured.
The Perseverance mine is a part of BHP’s Nickel West complex, which produced about 27,000 tonnes of nickel in the March quarter alone.
Meanwhile Westpac has scrapped its shareholder benefits package which offers discount deals to investors (including cheaper deals on term deposits, margin loans and low brokerage fees) after a review informed the bank that the package was too expensive to run.
“We received much feedback from shareholders, and while there was some support for the package, many of the benefits were seen as of little relevance to their needs and of little value,” Westpac said in a statement to the ASX.
“The package has been costly and difficult to administer, a factor that has been impacted by the expansion of the Westpac group’s suite of brands and products.”
New figures from the Reserve Bank of Australia show that the use of credit and debit cards is growing as consumers search out more convenient payment methods.
The new data shows cash accounts for 70% of all transactions, while EFTPOS, MasterCard and Visa debit card payments make up to 15%, followed by MasterCard and Visa credit card transactions at 9%.
“Cards are used extensively across all but very low transaction values,” the RBA said.
“For transactions between $25 and $200, debit and credit cards account for 45% of transactions.”
In the US, the Dow Jones Industrial Average gained 57.06 points or 0.68% to 8504.6, but new economic data showed private employers slashed half a million jobs in June.
The new data from the Mortgage Bankers Association showed the US mortgage applications index dropped 18.9% in the week ending 26 June, its lowest level since November.
“Rising unemployment, concerns about job security, potential buyers’ inability to sell their existing homes and problems with appraisals coming in too low are all weighing on demand,” Kenneth Rosen, chairman of the Fisher Centre for Real Estate and Urban Economics at the University of California, told Reuters.
The head of the World Trade Organisation has said governments are unfairly restricting trade in their responses to the downturn.
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“In the past three months there has been further slippage towards more trade restricting and distorting policies, but resort to high-intensity protectionist measures has been contained overall,” Pascal Lamy said in a report to WTO members.
Lamy called the global economic situation “fragile” and said global merchandise trade should likely fall by 10% in 2009, up from the WTO’s previous estimate of 9%.
“In April (year on year), the value of China’s exports of iron and steel dropped 67% and its exports of mineral ores and non-ferrous metals fell 64%,” the report said.
“The risks to trade growth remain firmly on the downside,” the report found, while opening the door to a quick improvement if global output picks up. “There is a possibility that even a small recovery in global demand will be associated with a much larger increase in trade,” it said.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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