Mid-Session Report (12:00 AEDT)
The ASX 200 started with modest gains on Tuesday, notwithstanding the weaker finish seen in US markets overnight. At its best levels in the first hour of trade the index was ahead by 11 points, although that lead faded quickly. Patchy improvements for the financials helped the market hold its ground initially.
The discussion around weaker iron ore prices continued to create headwinds for the miners although this was more acute for the junior players with the leading lights showing resilience having been marked down heavily yesterday. The price of iron ore suffered a steep loss overnight falling more than 8 per cent to $US104, plumbing the lowest levels in 18 months. Fortescue Metals Group (FMG) continued to lose ground having lost close to 10% yesterday, the stock was down a further 1 per cent in early trade on Tuesday.
In economic news the NAB's Monthly Business Survey was released. February saw business confidence ease slightly in the month, although the measure remains marginally above trend levels, suggesting firms remain hopeful of a recovery despite mixed signals on business activity. Business conditions fell to zero in February from 5 points in January and 4 points in December. Business confidence slipped back to their December levels of 7 points after rising to 9 points in January. Confidence in wholesale part of the economy improved significantly in the month. However, the bellwether industries of transport & utilities deteriorated sharply. Confidence is positive across all states. The key event for the week remains the Labour Force data due on Thursday,
Rare earth mineral miner Lynas Corporation (LYC) has reported a loss of $59.3 million, which compares to a loss of $54.5 million a year ago. Sales of $14.6 million, missed expectations of $15 million. The miner said it may require additional funding over the next 12 months and is in discussions with banks. LYC fell sharply following the result shedding up to 17 per cent although the loses have consolidate since and the shares are were down 11 per cent a short time ago
The Aussie dollar has weakened following the weaker reading on business conditions. The local unit fell from $US 0.9038 to $US 0.9010 although it has bounced recently to be trading at $US 0.9025 a short time ago.
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