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% lower, following the lead set by offshore markets overnight. On Wall Street, the Dow Jones slumped 0.6%, while the S&P 500 lost 0.8% and the tech-heavy NASDAQ a whopping 1.1%. The index has lost more than 5% since September 3 and at this rate, our ASX 200 index is headed for a negative result this calendar year.Related: Special Video report on our analysts' #1 ASX tech pick
- Iron ore prices have dropped to five-year lows of below US$80 a tonne overnight – and the China Iron and Steel Association says prices will stay at around these levels for some time.Global iron ore giants Rio Tinto Limited (ASX: RIO) and BHP Billiton Limited (ASX: BHP) had expected a mass of higher-cost Chinese iron ore mines to shut down, but that hasn't occurred as expected.
Output in China has risen 8.5% so far this year, with many mines staying open because they are part of the big steel mills production chain, according to one Chinese producer.
Hebei Iron and Steel Group, China's largest has four mines, while Shougang Group has as many as 12 mines, according to the Australian Financial Review (AFR).This may not be the lowest level we see iron ore prices at either – owning shares in any Australian iron ore miner, even the large ones, could be damaging to your wealth. While Rio and BHP may still be profitable at current prices, but their profit margins are getting crunched.
- A review of Australia's competition laws and policy could have detrimental effects on dominant players in many industries with supermarket owners Woolworths Limited (ASX: WOW) and Wesfarmers Ltd's (ASX: WES) Coles expected to be the biggest losers.Cabcharge Australia Limited's (ASX: CAB) dominance of taxi payment industry could also be at risk, while pharmacies may see a major upheaval to their industry.
- Tweet of the Day
$KMD Kathmandu records 2.3% lift in revenues for year to July with profit down 4.6% to NZ$42.152m. Final dividend 9c a share.^CJ #ausbiz
CommSec (@CommSec) September 22, 2014Clothing retailer Kathmandu Holdings Ltd (ASX: KMD) sees same store sales growth of 4.2% (before the effects of exchange rates). Not a bad result and the company expects more of the same in the 2015 financial year.
- Stock of the Day – brought to you by Andrew Mudie – Fortescue Metals Group Limited (ASX: FMG). Paying a dividend yield of 5.8% at the current price of $3.58, everything depends on where the iron ore price goes. You can read more here.
