Bank ratings, leadership vote likely to weigh down investors
AUSTRALIAN stocks are expected to open flat today, as investors react to Friday's downgrade of three Australian banks and the Labor leadership contest in Canberra.
AUSTRALIAN stocks are expected to open flat today, as investors react to Friday's downgrade of three Australian banks and the Labor leadership contest in Canberra.While there was a mostly positive lead from Wall Street on Friday, futures markets were pointing to a 0.2 per cent fall when Australian stocks begin trading today.AMP Capital Investors' chief economist, Shane Oliver, said the downgrades and the leadership vote would be investors' focus this morning. "All up, it suggests a fairly flattish start," Dr Oliver said.He said the downgrades by Fitch were not a surprise, given that Moody's and Standard and Poor's had already lowered their ratings of Australian banks. "Fitch is really just playing catch-up here," Dr Oliver said. "Mind you, every time it happens there is a little bit of a knee-jerk reaction."Positive US economic data helped push Wall Street higher on Friday night. The S&P500 rose by 0.17 per cent to its strongest level since 2008 and the Nasdaq gained 0.23 per cent.The Dow Jones Industrial Average closed 0.01 per cent weaker.In equities news this week, QBE Insurance Group, Harvey Norman, Woolworths and James Hardie Industries are among companies due to report their latest profit results.The February profit reporting season was almost complete, with about 90 per cent of companies having issued results, Dr Oliver said."While there have been some bright spots, overall the results are soft, with companies suffering from soft revenue growth, sticky costs and pressure from the strong Australian dollar," he said in a research note.Only 31 per cent of companies had exceeded market expectations, compared with 37 per cent in the June half and a norm of 45 per cent.It is a busy week for economic news, with the Bureau of Statistics due to publish retail trade, construction work and building approvals data, among other reports.Australian stocks finished firmer on Friday, with the benchmark S&P/ASX200 index breaking through the 4300-point resistance level for the first time since December 2011.