Australian shares outlook - Lower on bleak U.S. economic news

Tag : base metals


SYDNEY (Thomson Financial) - Australian shares are set to fall onFriday after bleak economic news sent U.S. stocks tumbling, whilethe resource sector is likely to be pressured by falls in prices ofbase metals.
U.S. financial firms, which have been badly bruised by the housingslump, led declines on Wall Street, after data showed that sales ofexisting U.S. homes dropped to a 10-year low.
Higher oil prices may also raise concerns about the impact ofrising costs on consumer sentiment and company profits, furtherdampening sentiment.
Australian September share price index (SPI) futures fell 2percent, or 102 points, to settle at 5,040, a 104.1-point discounton the underlying index.
'Today the market will be somewhat retarded but we can fall 70points and still be OK,' said Stuart Smith, a private clientadvisor at Bell Potter Securities.
'The bouncing baby bear market will suffer a bounce down today.'
On Thursday, the benchmark S&P/ASX 200 index rose 0.8 percent, or38.8 points, to 5,144.1, adding to a 2 percent rise in the previoussession.
The index has risen 7.4 percent from a 2008 low hit on July 16, butis still down 18.9 percent since the start of the year after rising11.8 percent in 2007.
In New York the Dow Jones Industrial Average fell 283.1 points or2.4 percent to 11,349.28.
News Corp dropped 0.4 percent.
In London shares fell as investors reacted to the bad news on theother side of the Atlantic. The FTSE 100 index closed down 87.6points or 1.6 percent at 5,362.3.
BHP Billiton fell 4.7 percent and Rio Tinto lost 3.8 percent.
Crude oil prices rose on Thursday in technically-driven trade.Adding support was new threats by militant groups in Nigeria toattack oil facilities. The September Nymex crude oil quote rose$1.05 or 0.8 percent to $125.49 a barrel.
Base metal prices slumped on the London Metal Exchange on Thursday.Nickel was worst hit, falling 5.9 percent in response to weakdemand from stainless steel mills. The fall in existing U.S.
home sales also weighed on metal prices.
Gold prices eased only modestly on Thursday, gaining support from ahigher oil price. The August Comex gold contract fell 10 cents to$922.70 an ounce.
($1 = A$1.04)
bruce.hextall@thomsonreuters.com
bhx/ms
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