Amanda Morrall details key news overnight in 90 seconds at 9 am including a pull back in U.S. share markets; strong corporate earnings, deteriorating conditions in Spain; and expectations of a cut to the Official Cash Rate later today by the Reserve Bank of Australia.
Monday saw a pull back for U.S. markets which retreated yesterday on the back of economic data that shows consumers still predominantly in saving mode. While spending increased slightly, economic data shows saving is still foremost on American minds. The lift in spending was attributed largely to an increase in gasoline prices. (See Yahoo Finance story here for more).
Household spending accounts for 70% of the U.S. economy so is crucial to the country's recovery.
Nagging concerns about the Eurozone and news of Spain sliding into a recession also had a negative effect on markets.
Data released Friday revealed that 24% of the workforce there is now now jobless, the highest rate of all 17 countries in the Eurozone. That translates into 5.5 million people without jobs. Overnight, Spain’s largest unions led marches involving thousands of protesters in 55 cities.
Rating agency Standard & Poor's has already downgraded Spanish Sovereign Debt. Analysts say the outlook is so gloomy that Spain may be next in line for a bail-out. (See Radio New Zealand story here for more commentary).
The Benchmark S&P 500 fell by more than 0.5% sinking below the 1,400 mark that had temporarily buoyed investor sentiment. (Reuters has more here).
Both the Dow and Nasdaq also closed lower yesterday. Oil and gold prices also slumped.
On the up side, quarterly earnings for the U.S. corporate sector are proving much better than analysts expected.
For the 276 companies that have reported since April 10th, earnings per share are up 6.7 percent. That's 7% above what was expected.
Some analysts are suggesting strength in the corporate sector will boost the benchmark S&P 500 to a record this year. However, there is also a view that this year's 12% rally is basically as good as it's going to get. (Bloomberg has more here).
Later today, we'll have news on where the Official Cash Rate is headed in Australia. Economists are predicting the Reserve Bank could lower the rate by as much as 50 basis points. It's currently at 4.25%.
Economists at ANZ are predicting a more modest cut of 25 basis points and a muted response from markets.
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