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Aussie builders to benefit from strong US home construction

Wall Street markets have posted good gains overnight thanks to solid earnings reports from IBM, Intel and Honeywell and strong US housing data. A US Commerce department report showed that new home construction rose in June to the highest level in almost four years.

The Dow Jones Industrial Average closed up 0.6%%, the S&P 500 Index adding 0.7% and the Nasdaq Composite Index was up 0.7%.

European markets were also up strongly overnight, with the UK’s FTSE 100 adding 1%, Germany’s DAX jumped 1.6% while Paris’ CAC 40 rocketed 1.8%.

The Australian dollar has climbed against the US dollar, buying 103.7 US cents, and hit an all-time high against the Euro, touching 84.5 euro cents overnight.

Commodities markets were mixed, with spot gold falling slightly to US$1,573.40 an ounce, while oil put on nearly 1%, trading around US$90 a barrel.

Futures indicate likely positive start

The ASX SPI futures have closed up 35 points or 0.9%, suggesting the S&P / ASX 200 (Index: ^AXJO) (ASX: XJO) is likely to show strong gains in early trading.

Building materials and construction companies exposed to the US market could be in focus today, including James Hardie Industries (ASX: JHX), CSR Limited (ASX: CSR) and Boral Limited (ASX: BLD).

Santos Limited (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) will release their June quarter reports today. Given the current cost overruns on several Liquefied Natural Gas projects, investors will likely be looking for updates on the pair’s energy projects.

Poker machine makers Aristocrat Leisure (ASX: ALL) and Ainsworth Game Technologies (ASX: AGI) could also be in focus, after signs that government handouts were contributing to strong pokies revenue growth. Both Woolworths Limited (ASX: WOW) and Wesfarmers Limited (ASX: WES) own thousands of poker machines, and hundreds of hotels. They are also likely to benefit from the current government handouts.

Foolish takeaway

During tough times, it appears Australians like to entertain themselves more, with alcohol, gambling and entertainment companies benefitting. Not a bad theme to follow, if times get worse.

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More reading

Motley Fool writer/analyst Mike King owns shares in Woodside Petroleum and Woolworths. 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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