Welcome to Thursday. Here are the five things I'm looking at today on the Australian sharemarket.
- The S&P/ ASX 200(Index: ^AXJO) (ASX: XJO) has opened down 0.3%, following offshore leads.US markets fell heavily again overnight, with the Dow Jones dropping 1.1%, the broader S&P 500 a slightly worse fall of 1.4% and the tech-heavy NASDAQ down by 0.9%.
It was the biggest 2-day fall in a year for the Dow Jones and comes despite more than 77% of companies in the S&P 500 Index beating analyst estimates, according to Bloomberg.
The killer blow was the US Federal Reserve citing international risks to the US economy – many large US companies earn a significant percentage of income from outside the US. A stronger US dollar is also likely to negatively affect their earnings.
The Australian dollar has dropped against the US dollar and is currently buying 78.95 US cents.
- Oil prices and iron ore dropped again overnight, with Brent oil falling 2.1% to US$48.56 per barrel, and iron ore lost 0.7% to US$63.09 per tonne.No surprise then that ASX-listed oil producers Santos Ltd (ASX: STO), Woodside Petroleum Limited (ASX: WPL) and Origin Energy Limited (ASX: ORG) are being sold off in early trading. Is there an opportunity for investors? Go here to find out.
- Fortescue Metals Group Limited (ASX: FMG) shares are rising, up 5.4% to $2.15 in early trade, after the iron ore miner released its quarterly production report. Fortescue says its C1 cash costs fell 11% to SU$28.48 per tonne during the December quarter, and forecast even lower C1 production costs of US$25-26 per tonne for the second half of 2015 financial year.The problem as colleague Ryan Newman pointed out yesterday, is that Fortescue still has US$9 billion of debt and margins are being squeezed, making it difficult for the company to repay its debts.
- Tweet of the Day
Rate cut bets soar as RBA shifts expectations https://t.co/4HyIQfjaQQ
christopher joye (@cjoye) January 28, 2015Economists overwhelmingly think the RBA will leave rates on hold, but there's a growing band who think a rate cut is coming.
- Stock of the Day– brought to you by Owen Raskiewicz – National Australia Bank Ltd (ASX: NAB). With a huge forecast fully franked dividend yield, the big bank may be very tempting for investors.
