Australian shares are expected to start the week strongly after European leaders agreed at the weekend to extend billions of euros in aid to the region’s struggling banks in a bid to limit the damage of ongoing debt crisis.
On the ASX24, the SPI futures index was 38 points higher to 4095. The Australian dollar has climbed to a two-month high following the EU summit. At 6.30am, the Australian dollar was trading at $US1.0262, up from $US1.0178 on Friday. Early today the local currency hit $US1.0268, its highest level since May 4.
Locally, the Reserve Bank of Australia board meets tomorrow to decide on official interest rates. Financial markets don’t expect the RBA to move rates from 3.5 per cent even though the run of economic data since the last meeting has been less than robust. Pundits expect the central bank will wait to see the June-quarter inflation numbers, due for release on July 25.
What you need to knowSPI futures index was 38 points higher to 4094The $A was higher at $US1.0262Gold jumps most in four weeksOil prices rocket on EU summit dealEuro stocks leap on summit dealUS stocks end quarter on a highAustralian business calendar: July 2-6Wall St week ahead: More than a one-day rally?
Local gains could be limited, however, by another soft reading of China’s manufacturing activity. China’s official purchasing managers’ index (PMI) slipped to 50.2 in June, from 50.4 a month earlier (a PMI reading below 50 means contraction), pushing the index to a seven-month low.
The European debt deal allowed struggling Spanish and Italian banks to tap the region’s 500-billion euro bailout fund directly – without having to record such loans on their national balance sheets, thereby avoiding a rise in their public debt.
Global investors cheered the decision and an agreed 120 billion euro ”growth pact”. Italy’s bourse soared 6.59 per cent on the news, while Spanish shares surged 5.66 per cent. On Wall Street, the Dow Jones Industrial Average gained 2.2 per cent, while London’s FTSE closed 1.42 per cent higher.
Making news today
There is no major economics or companies news scheduled for today
Making news this week:Tuesday: Reserve Bank of Australia board meeting and interest rate decision, Australian Bureau of Statistics (ABS) building approvals for MayWednesday: ABS retail trade for May, US markets closed for Independence Day public holidayThursday: ABS international trade in goods and services for May
How we fared last week
The Australian sharemarket closed higher in the last trading session of the financial year, with investors heartened by the fact that European leaders looked like they had settled on a plan to contain the euro zone’s debt crisis – at least in the short term.
On Friday, the benchmark S&P/ASX200 index was 49.8 points, or 1.23 per cent, higher at 4094.6 points, while the broader All Ordinaries index was up 49.9 points, or 1.22 per cent, at 4135.5 points.
BusinessDay with agencies
This story Administrator ready to work first appeared on Nanjing Night Net.