ASX
An investor is reflected in a window as he looks at boards displaying stock prices and an advertisement for zero percent interest rate for purchasing a car at the Australian Securities Exchange in central Sydney, Australia, July 8, 2015. Reuters/David Gray
  • Local shares have started the week with losses across all sectors of the ASX 200. Domestic shares followed the precedent established by US and European markets at the end of last week. European shares fell on Friday as investors debated whether the US Federal Reserve would start the rate hike process on September 17. The FTSEurofirst 300 index fell by 2.4% after rising by 2.5% the previous day. The German Dax fell by 2.7%, while the UK FTSE index lost 2.4%. For similar reasons US sharemarkets retreated as investors as investors concluded that the US Federal Reserve would start lifting interest rates in September. Additionally, traders and investors were keen to square positions ahead of a holiday weekend. The Dow Jones ended lower by 272 points or 1.7%, the S&P 500 lost 1.5% while the Nasdaq fell by almost 50 points or 1.1%. Over the week the Dow fell by 3.2%, the S&P 500 lost 3.4% and the Nasdaq fell by 3.0%.
  • The Energy sector led the declines with the sub-index falling by the most part of 2% in the first half of the session, although there were a handful of sectors that chalked up losses of more than 1%. Commodity prices were under pressure at the end of the week, driven by a stronger US dollar as investors anticipated a rise in US interest rates. Oil benchmarks finished lower, with WTI crude futures falling to US$46.05 a loss of 1.5%. . Base metals finished lower on Friday. Metals were generally lower, copper fell by the most in eight weeks after weak German factory orders sparked demand fears. Germany is the third largest consumer of copper.
  • Companies going ex-dividend were another factor weighing on the market. Names trading without an entitlement to a dividend included; CSL (90c/s div) Insurance Australia Group (IAG) (16c/s), Amcor (AMC) (28.6c/s) Servcorp (SRV) (11c/s) and Qube Holdings (QUB) (2.8c/s).
  • In company news, Westpac ( WBC) said it will increase its annual investment spend by 20% and further reduce costs, as it revealed an update to its strategy, which includes plans to secure more than one million new customers within two years. The group will lift its annual investment to $1.3bn to drive initiatives that will improve services and efficiency, with a focus on technology and simplification, chief executive Brian Hartzer said today. He stated that Westpac will cut its expense to income ratio—calculated by dividing operating expenses by operating income—to below 40% within three years. Apart from adding new customers, the bank is also aiming for a rise in products per customer, Hartzer said, noting growth priorities in the wealth, small and medium enterprises, and Asia segments. WBC said it will roll out more new look branches to represent 55% of its network by 2018. Hartzer today also reaffirmed the group’s return on equity target of above 15%. WBC shares were at $29.79, for a loss of 15 cents or 0.50%.
  • The US dollar was mixed against major currencies over European and US sessions. The euro rose from lows near US$1.1090 to highs near US$1.1175, ending US trade near US$1.1155. The Aussie dollar fell from highs near US69.90c to lows around US69.00c. In early Asian trade the local unit was recently trading at US69.40c.

Tom Piotrowski - Market Analyst (Author)

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