Mid Session Report
The Australian stock market pushed slightly higher at the open, following gains in US and European markets informed by hopes that the partial United States government shutdown will not seriously harm the economy.
A woman walks past a screen showing market indices in Tokyo, on 22 August.
There is a reasonable chance that this will be a short lived affair although other matters like the debt ceiling remain to be navigated. One of the outcomes in the last day that has calmed nerves somewhat has been commentary from S&P. The credit ratings agency announced that the debt ceiling debate is unlikely to result in a change in the US´ AA+ credit rating. S&P says ´´the current impasse over the continuing resolution and the debt ceiling creates an atmosphere of uncertainty that could affect confidence, investment, and hiring in the US. However, as long as it is short-lived, we do not anticipate the impasse to lead to a change in the sovereign rating.´´
In economic news the ABS released its August Building Approvals series and the figures were substantially below expectations. Consensus for month on month was a decrease of 0.5% and increase of 12.8% year on year. Instead we got minus 4.7% and 7.7%. The figures indicate that the handover from the mining to the non-mining economy continues to move ahead slowly.
Elsewhere The Warrnambool Cheese and Butter Factory Company predict a rise in earnings for fiscal 2014 after market conditions improved. WCB said it expects fiscal 2014 EBITDA between $47 million and $52 million.
The Mongolian government says progress has been made in relation to resolving matters relating to the development of Mongolia´s massive Oyu Tolgoi copper and gold mine. A meeting will be convened next week to deal with remaining issues. Rio Tinto Ltd, the project operator and major shareholder, and the Mongolian government held an Oyu Tolgoi LLC board meeting last week in London in which they resolved 15 out of the 30 urgent issues that had led to the suspension of the project. At full output, Oyu Tolgoi is set to produce an average of 450,000 metric tons of copper and 330,000 ounces of gold a year, as well as silver and molybdenum, a metal used to strengthen steel. The International Monetary Fund has estimated the mine will generate up to one-third of Mongolia´s gross domestic product when it reaches full production, expected in 2021.
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