Welcome to Tuesday. Here are the five things I'm looking at today on the Australian sharemarket.
- The S&P/ ASX 200 Index (Index: ^AXJO) (ASX: XJO) has opened 0.4% higher despite weak offshore leads . On Wall Street overnight, the major indices all closed lower, with the Dow Jones down 0.1%, The S&P 500 down 0.15% and the NASDAQ 0.4%. Concerns over deflation potentially occurring in Europe, and the number of ongoing armed conflicts have been noted as the primary causes for the drop.But as John Carey, portfolio manager at Pioneer Investment Management said recently, "The recovery is alive and well, and while there are still risks we need to keep an eye on, fundamentals suggest we're in pretty good shape and could continue to move higher."
- Rumours that Glencore and Rio Tinto Limited (ASX: RIO) could be about to merge are gathering pace. The merger would create the world's largest miner and be worth an estimated $182 billion.The Australian Financial Review (AFR) reports that Glencore has begun discussions with Rio's largest shareholder, China's Chinalco. But the AFR notes that regulators around the globe may be opposed to the deal, given the stranglehold the combined company would have in many commodities, including iron ore, copper, coal, zinc and nickel.Rio's board are also believed to be against the deal, as they think their company is performing better.Rio's American Depositary Receipts (ADRs) traded as much as 20% higher on the New York Stock Exchange overnight, and shares could rocket higher on the ASX today. At the open, Rio shares were up 3.6%.
- The Reserve Bank of Australia (RBA) meets today, with all economists tipping the official cash rate to be left at 2.5%. But many economists expect the central bank to comment on the Australian dollar exchange rate against the US dollar and property prices.The Aussie dollar has dropped 7.5% in the past month, as ic currently buying US86.7 cents.
Most economists don't expect the RBA to lift rates until next year at the earliest, with some predicting flat rates until 2016.That means high dividend yielding stocks are likely to stay in demand at least until official interest rates start to rise. - Tweet of the Day.
AiG-HIA Performance of Construction Index rose 4.1 pts to 59.1 in Sept; strongest pace of expansion in 9 year history of survey^TP #ausbiz
CommSec (@CommSec) October 6, 2014Good news for construction and building material companies as building construction gathers pace. Back in May this year, colleague Tim McArthur wrote a piece identifying a number of companies for investors to consider. You can read more here.
- Stock of the Day – brought to you by Andrew Mudie – Coca-Cola Amatil (ASX: CCL). With a 7% dividend yield (grossed up for franking credits), is now the time to take a closer look at the soft drink bottler?
