Gillard speech to replace RSPT will boost market today
July 2nd, 2010 by Katy Loi
Closing Data
| Current | Change | % | |
|---|---|---|---|
| Dow Jones | 9,732.53 | -41.49 | -0.4% |
| NASDAQ | 2,101.36 | -7.88 | -0.4% |
| S P 500 | 1,027.37 | -3.34 | -0.3% |
| FTSE 100 | 4,805.75 | -111.12 | -2.3% |
| Nikkei 225 | 9,191.60 | -191.04 | -2.0% |
| ASX 200 | 4,237.50 | -64 | -1.5% |
| COMEX Gold - Dec 09 | 1,206.70 | -39.2 | -3.1% |
| COMEX Silver - Sep 09 | 18.69 | -0.018 | -0.1% |
| COMEX Copper - Sep 09 | 287.7 | -7.35 | -2.5% |
| WTI Spot | 72.95 | -2.68 | -3.5% |
| AUD-USD | 0.8437 | 0.003 | 0.4% |
| Aluminium | 1,924.00 | -38.5 | -2.0% |
| Copper | 6,515.00 | -70 | -1.1% |
| Lead | 1,690.00 | -51.5 | -3.0% |
| Nickel | 19,430.00 | -505 | -2.5% |
| Tin | 17,475.00 | -275 | -1.5% |
| Zinc | 1,730.00 | -29.5 | -1.7% |
The Dow closed down 41 points on disappointing US manufacturing, employment and home sales reports, suggesting growth has slowed despite government spending. The manufacturing gauge fell more than 56%, home sales fell 30% in May and jobless benefits rose. The price of gold plunged nearly 4 percent to below $1,200 an ounce which has broken a major technical level. This suggests the equities sell-off may have started heavy fund selling in Gold, making the move the biggest one-day decline in five months. The last candle on the Dow indicates buying strength is coming back into the market as it only closed down 41 points after being down around 150 points early in the session.
Important data out tonight is US Non Farm Payrolls and the unemployment rate – both expected to be negative. Should the number come out better than expected this should put more buying pressure in the market as the expectation of negative numbers may have already been priced in.
Despite the negative lead from Wall St, our market will be boosted by the speech made by Gillard this morning at 8:30 AEST, stating that the resource super profits tax will be replaced with resource rent tax on iron ore and coal. The Petroleum resource rent tax will extended to all oil and gas projects at 40%.
The company tax will be cut to 29%, not 28%. The new minerals resource rent tax will be 30% and projects will get 25% extraction allowance. This new regime will begin in July 1 2012. The effect is that this will bring significantly better returns for resources than under the previously mooted tax. This could see out market end the eight straight day decline, bringing it, potentially above 4300 today and then 4350, to close a price gap over the next few sessions as the news moves through global markets. Our miners which have underperformed over the last two months under the proposed resource profits tax will get a long awaited lift today.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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