The Australian stock market got off to a cautious start Wednesday following the release of the Federal Budget that boosted infrastructure investment, and also amid mixed cues from Wall Street. After an early surge into positive territory, the market has now slipped into the red due to heavy selling in some energy, materials, financials, utilities and consumer staples stocks.
The benchmark index S&P/ASX 200, which edged up to 3,895 in early trading, has drifted down into the red and is currently trading at 3,845, down 33 points from its previous close. The All Ordinaries index is down 31 points at 3,833.
From the banking sector, ANZ Bank and National Bank of Australia are trading modestly higher while Commonwealth Bank of Australia is down with a small loss.
Among those from the materials space, Newcrest Mining is up 2.2%, and Orica is trading up 1.0%. However, Rio Tinto is trading lower by 4.72%, and BHP Billiton is down with a modest loss. In the energy space, Woodside Petroleum is up 1.03%, while Worleyparsons is trading 2.16% down.
Capital goods stock Leighton Holdings is trading stronger by 1%, and healthcare stock Sonic Healthcare is up 2.45%. Media stock News Corp is down 4.53%.
In the currency market, the Australian dollar is trading at 0.7700 to the U.S. dollar.
Among other markets in the Asia-Pacific region, New Zealand is trading modestly lower, while Korea and Japan are trading in positive territory.
Stock markets across the Asia-Pacific region had turned in a mixed performance on Tuesday. While Hong Kong's Hang Seng Index edged up 0.4%, Japan's benchmark Nikkei 225 Index fell 1.6%.
The major European markets all ended the day in the red after seeing some choppy trading. While the U.K.'s FTSE 100 Index fell 0.2%, the French CAC 40 Index and the German DAX Index closed down 0.5% and 0.3%, respectively.
On Wall Street, stocks rebounded to an extent and closed on a mixed note on Tuesday after spending a major part of the session in negative territory. After showing some signs of a recovery, financials lost out for the second successive session.
General Motors found the going quite tough on concerns whether the company will have a restructuring plan ready for government review by June. Yesterday GM's management indicated that it is more probable that GM will need to accomplish its goals through bankruptcy.
Shares of rival Ford also came under pressure after the automaker announced a public offering of 300 million shares of its common stock. Ford closed down 17.6%, pulling back further off the ten-month closing high it set last week.
In another news, Microsoft has announced that it will issue $3.75 billion of senior unsecured notes to help fund working capital requirements, capital expenditures, or share repurchases.
There was not much for the street in the form of earnings reports. In economic news, the Commerce Department released a report showing that the U.S. trade deficit for March came in wider than in the previous month, with the value of exports falling by more than the value of imports. While the report showed that the trade deficit widened to $27.6 billion in March from a revised $26.1 billion in February, economists had expected the deficit to widen to $29.0 billion.
Additionally, the March reading is an improvement from the first quarter average through February, so it should factor favorably into the revised first quarter GDP reading. The latter point aside, the March trade balance report serves as another reminder that global trade continues to contract as countries around the globe grapple with the effects of the financial crisis.
The major averages ended the session mixed, with the Dow posting a moderate gain. While the Dow closed up 50.34 points or 0.6 percent at 8,469.11, the Nasdaq fell 15.32 points or 0.9 percent to 1,715.92 and the S&P 500 closed down 0.89 points or 0.1 percent at 908.35.
June crude oil contracts opened the pit trade at session highs. After trading below the flat line and hitting session lows of $57.81 per barrel in the afternoon, the contracts closed in positive territory at $58.85 per barrel, up 0.6%.
Economic data is likely to be in focus on Wednesday, with the Commerce Department scheduled to release its report on retail sales in the month of April. Economists expect sales to come in unchanged after falling by 1.2 percent in March.
Traders are also likely to keep an eye on monthly reports on import and export prices and business inventories as well as the weekly crude oil inventories report.
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