A man looks the board of the Australian Securities Exchange ASX in central Sydney August 7, 2013.
A man looks the board of the Australian Securities Exchange in central Sydney August 7, 2013. Reuters/Daniel Munoz
  • Local shares remained under pressure in early trade on Friday as the ASX 200 continued to be constrained by falling commodity prices. US and European shares ended their respective sessions in the red overnight.
  • US sharemarkets fell on Thursday as poor earnings results and downbeat forecasts gave investors a reason to sell equities. Caterpillar reported sales declines in key markets its shares fell 3.6%. Nine of the ten major S&P sectors were lower. Dow Chemical hit an intra-day four-year low and closed down 4.5%, warning of soft demand in China. The stock weighed heavily on the S&P material sector which lost 1.5%. American Express fell 2.6% after missing revenue targets. The Dow Jones fell by 119 points or 0.7%. The S&P 500 lost 0.6% while the Nasdaq lost 25 points or 0.5%.
  • In line with the themes seen on Wall St, Materials remained at the top of sellers ‘to do list’ on Friday. The group saw the biggest loss among the ASX sectors over the morning. Iron ore prices continue to run into headwinds in the face of strong production from leading global names. This dynamic remained in focus following the latest production report from Brazil’s Vale. The miner said it had produced 85.3Mt of iron ore in the June quarter, beating consensus expectations of 82.5Mt. While the mining giant plans to cut 25Mt of lower quality iron ore production from the company’s south and southeast mines in Brazil and from third-party purchases, Vale intends to expand full year production to a record 340Mt by boosting output of higher margin product. BHP shares were fell 0.7 per cent to $25.32 .while Rio Tinto did likewise, losing 1.25 per cent to $50.56.
  • In Company news, Oroton Group (ORL) announced that it will sell its stake in Brooks Brothers' Australian operations, two years after partnering with the global fashion brand. The luxury goods maker has agreed to sell its interest in the joint venture, which includes 13 stores, to parent company Brooks Brothers Group. Oroton did not indicate a price for the stake, although it was highlighted that the deal won't have any impact on its full year profit result. ORL shares were recently at $1.88 up 2.5 cents or 1.3%.
  • The Aussie dollar has fallen from highs near US74.15cand ended US trade under pressure, again reflecting the weaker outlook for commodity prices. The weak trend for the local unit continued in early Asian trade.

Tom Piotrowski - Market Analyst (Author)

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