Foolish Preview: Wall Street closes mixed, and rates decision day


Overnight on US markets results were mixed, with The Dow Jones Industrial Average falling 0.1%, the S&P 500 Index  up by 0.3% and the Nasdaq Composite Index rising by 0.6%. The US manufacturing sector shrank for the first time in nearly three years, indicating a slowdown (at least temporarily) in the US economy.

Europe had a much better result with the UK’s FTSE 100 index rising by 1.3%, the German DAX  up by 1.2% and the French CAC 40 adding 1.4%.

The Australian dollar barely moved, currently trading at around $1.02.

Commodities markets were also flat, with gold currently trading around US$1597.19.66 an ounce and both oil and copper down slightly.

Early gains ahead?

The ASX SPI futures closed up 15 points this morning, indicating the S&P / ASX 200 (Index: ^AXJO) (ASX: XJO) could show an early rise.

All eyes will be on today’s Reserve Bank of Australia’s (RBA) interest rate decision. Economists are widely tipping the RBA to keep rates on hold at the current official cash rate of 3.5%, based on views that last month’s interest rate cut was starting to have a positive impact on our economy. The big four banks, Australian and New Zealand Banking Group (ASX: ANZ)Commonwealth Bank of Australia  (ASX: CBA)National Australia Bank (ASX: NAB) and Westpac Banking Corporation (ASX: WBC) could be in focus depending on the RBA’s decision.

David Jones Limited (ASX: DJS) could be in the news again today, following the announcement  yesterday that the British Private Equity firm, EBPE had withdrawn its $1.65 billion bid for DJs. Questions remain over the timing of the bid, coming on June 30, financial year end, which was good news for fund managers and their end of year performance bonuses. The Australian Financial Review is urging Australia’s’ Securities and Investments Commission to have a good long, hard look at trades in the stock, and the circumstances surrounding the whole deal.

Rio Tinto Limited’s (ASX: RIO) CEO sent employees an email yesterday, informing them of plans to slash support and services expenses by 10% globally, as the company tries to cut rising costs in the face of falling commodities prices. Both Rio and BHP Billiton Limited (ASX: BHP) are looking at reducing spending on future projects as well, as China’s growth slows.

Foolish takeaway

The last time I suggested the markets were in for a quiet start, the index jumped 1.2%. Which goes to show how hard it is to predict short-term movements in the market. Better to focus on the long term, and ignore the market’s daily ructions. Fool on!

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Motley Fool writer/analyst Mike King owns shares in BHP. The Motley Fool‘s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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