ASX to follow the Dow lower as investors fret about the unknown

Just when you thought it was time to pile back into the sharemarket, US stocks pulled back for a second day running.


As is the norm, the ASX is set to follow the American lead. The wind continued to come out of the Australian dollar’s sails, now trading below $US1.03. Parity by the end of May? Place your bets, forex traders, and good luck making a buck. It’s a well know fact most amateur forex traders lose money.

US markets were down across the board, signaling pessimism in advance of tomorrow’s jobs report. However, it was a triumphant day for short sellers following the lead of famed investor David Einhorn, with former high flyer Green Mountain Coffee Roasters (Nasdaq: GMCR) being roasted for a near 50% loss.

Here’s how the major indexes fared in the land of the free…


Gain / Loss

Gain / Loss %

Ending Value

Dow Jones Industrial Average (INDEX: ^DJI) (61.98) (0.47%) 13,206.59
Nasdaq (35.55) (1.16%) 3,024.30
S&P 500 (10.74) (0.77%) 1,391.57

It was a bit of a slow news days, but that didn’t stop some investors fretting about the unknown.

[Related reading: The devastatingly simple way to play the interest rate cut]

A couple of the more volatile components of the Dow, Hewlett-Packard (NYSE: HPQ) and Bank of America (NYSE: BAC), saw the biggest declines, down 2% and 3% respectively. B of A lost its investment-banking head for the Middle East, another reminder of the departure of top talent from the firm. And HP actually had good news, reclaiming the top spot for PC sales this past quarter.

The 19-commodity Thomson Reuters-Jefferies CRB index fell nearly 1%. Spot gold was down 1.1% to $US1635 an ounce, its biggest daily decline since April 4. Oil sank 2.6% per cent, at $US102.50 per barrel, its biggest one-day loss since December 14.

It’s unlikely to be a green day for Australian resources heavyweights including BHP Billiton (ASX: BHP), Rio Tinto (ASX: RIO), Woodside Petroleum (ASX: WPL) and Newcrest Mining (ASX: NCM).

The local banks have are unlikely to do it for investors either. They’ve had a good run so far in 2012, but after in-line results from ANZ (ASX: ANZ), Westpac (ASX: WBC) and National Australia Bank (ASX: NAB), investors are now realising banking is a slow growth proposition, at best. That shouldn’t be news to regular Motley Fool readers. Still, a very healthy dividend yield should ease any pain.

The AFR is reporting James Packer is seeking as much as $1.1 billion for his half share in Consolidated Media Holdings (ASX: CMJ). Potential buyers include News Corporation (ASX: NWS), Telstra (ASX: TLS) and Seven Group Holdings (ASX: SVW).

And finally, Bloomberg reports Facebook, the world’s most popular social-networking site, is valuing itself at as much as $96 billion in an initial public offering. Facebook and its holders plan to sell about 337.4 million shares at $28 to $35 each, according to a regulatory filing today. At the upper end of that range, Mark Zuckerberg’s stake would be valued at $17.6 billion, making him richer than Microsoft‘s (Nasdaq: MSFT) CEO Steve Balmer, and just about every other person on the planet.

If you’re looking in the market for some high yielding ASX shares, look no further than “Secure Your Future with 3 Rock-Solid Dividend Stocks”. In this free report, we’ve put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

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Bruce Jackson has an interest in ANZ, NAB, WBC, BHP, Microsoft and Telstra. 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).

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