Customers select vegetables at a supermarket in Fuyang, Anhui province, China, May 9, 2015.
Customers select vegetables at a supermarket in Fuyang, Anhui province, China, May 9, 2015. China's consumer inflation edged up to 1.5 percent in April, less than market expectations and adding to concerns about burgeoning deflationary pressures which are likely to lead to more policy easing Reuters/Stringer
  • Local shares have added to yesterday’s gains in early gains on Tuesday even though European markets fell and Wall St was closed overnight. European shares fell on Monday on light volumes. Spanish and Greek stock markets were hit following a poor local election result in Madrid and concerns over Greece's debt problems. The Greek government said that it intended to make good on its debt obligations but needed aid to do so. Athens main ATG equity index fell 3.1%. Spain's IBEX fell 2% after voters punished the ruling People's party for four years of severe spending cuts and corruption scandals. Volumes were thin due to public holidays in US, UK and Germany. The FTSEurofirst 300 fell by 0.1% with the German Dax closed for a national holiday and UK FTSE closed due to a bank holiday. US sharemarkets were closed for the Memorial Day holiday. The ASX 200 opened flat and then steadily grew in confidence and as lunch loomed the index was within sight of the best levels of the session so far. All ASX sectors were higher in early trade led by Utilities and followed by Consumer Discretionary stocks, while Telecoms were at the tail of the field when their gains were compared to the remaining sectors. Fortescue Metals Group (FMG) stood out among the miners with a gain of more than 10%, adding as much as 1 billion dollars to its market value, after reports that Chinese companies are interested in buying the troubled iron-ore miner.
  • Aristocrat Leisure (ALL) shares were higher after reporting first half results. ALL reported a net profit of $77.6 million for the six months to March 31, up from $57.4 million a year ago. Revenue rose 74% and was boosted by the acquisition of U.S-based slot and bingo machine maker Video Gaming Technologies. The strong growth of the North American business was a feature of the result with a $76.3 million post-tax profit. At the same time ALL said that Australia made a $10.2 million contribution to the bottom line having delivered significant share gains across key markets driven by the top performing Helix cabinet and strong performing new games. Digital delivered strong earnings growth due to continued growth in Facebook and successful iOS launches since the prior corresponding period. The Asia Pacific performance was flat, with strong sales into new Macau openings during the period offsetting reduced churn. Europe and South Africa declined due to weak demand. The market was heartened by ALL’s guidance for a $220 million annual profit. It kept its interim dividend flat at eight cents per share. ALL shares were at $8.39 a gain of 52 cents or 6.7%.
  • Hearing implant maker Cochlear (COH.AU) announced that long-serving CEO Chris Roberts would be stepping down. Mr. Roberts has led COH since February 2004, and will be replaced by Chris Smith who currently heads the company's North American operations. In a statement released by the company Mr Roberts said "It is time to hand over the leadership baton. I have worked closely with Mr. Smith for more than a decade. I know that he has a deep commitment to the company, our people and our recipients and healthcare professional partners." COH shares were at $88.39 a gain of 93 cents or 1.06%.
  • In the currency markets, the US dollar has maintained its recent recovery. Broad based buying of the Greenback has seen the Euro fall a further 0.4 per cent to 4 week lows around 1.0930 on growing uncertainty over a Greek default as early as next month. Greece and its creditors are still trying to negotiate a deal to unlock further financial aid to Greece ahead of a €305 billion debt repayment which is due on 5 June by Greece to the IMF. Economists see a greater probability of a resolution between Greece and the EU and IMF being reached later this week, but it is far from guaranteed. Elsewhere, non-FOMC voter, Loretta Mester, highlighted in a speech overnight that US interest rates are likely to be raised if data supports it. Her comments suggest the US dollar will likely grind higher this week as market pricing for the Fed to begin raising rates rises from 50 per cent in September to 72 per cent in October. The Australian dollar remains sidelined around 0.7820 US cents.
Tom Piotrowski - Market Analyst (Author)
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