Stocks hang on to sliver of early gain
THE sharemarket gave up most of an early 36-point gain yesterday as investors speculated on whether US policymakers would unleash fresh stimulus for the world's largest economy amid the deepening economic crisis in Europe.
THE sharemarket gave up most of an early 36-point gain yesterday as investors speculated on whether US policymakers would unleash fresh stimulus for the world's largest economy amid the deepening economic crisis in Europe.The S&P/ASX 200 Index limped to a 9.1-point, or 0.22 per cent, gain at 4132.4.The US Federal Reserve is expected to signal an intent to stimulate its economy, but analysts fear anything less than concrete action would be met with disappointment by the mark."Although there is a growing number of analysts who feel we will see some form of [stimulus], there is also a possibility that we will simply get an adjustment in the policy language to indicate the Fed's greater readiness to ease in future, particularly given the increased risks to the outlook arising from the eurozone crisis," said IG Markets strategist Stan Shamu."Whichever way it plays out, we are likely to see some big moves in the currency space," he said.And despite the Reserve Bank's two rate cuts at the end of last year, data from the Bureau of Statistics yesterday showed housing starts tumbled 12.6 per cent for the first three months of the year. Analysts had tipped a 2.3 per cent fall. On an annual basis, new home starts tumbled 24.5 per cent, the ABS said."It's a very disappointing number," said Moody's analyst Katrina Ell. "It shows consumers are still very cautious and the housing market is still very weak, and we haven't really seen the stimulatory impact of the rate cut coming through."Despite the gloom, shares in building materials company James Hardie gained 6?, or 0.8 per cent, to $7.77, on positive housing starts data out of its main market in the US.Consolidated Media Holdings jumped 30?, or 9.7 per cent, to $3.38 in response to a $1.97 billion, $3.50-a-share takeover bid from News Ltd that will lift its ownership in Foxtel and Fox Sports to 50 per cent and 100 per cent respectively.Rio Tinto gained 95?, or 1.7 per cent, to $57.72 after the company said it would will spend $3.7 billion to increase iron ore output in Australia by a further 25 per cent to 353 million tonnes a year by 2015, despite forecasts of waning global demand.
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