News: Midday: Wall St sell-off sparks ASX plunge

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After climbing more than 4 per cent last month the Australian share market has plunged into August and ahead of America’s key monthly jobs report. The falls come after Wall Street’s major indexes sank about 2 per cent overnight on fears US interest rates could be hiked sooner than expected. Traders were also unnerved by concerns over Argentina’s debt default, geopolitical tensions, soft euro zone economic figures and weak earnings. Across the local board all sectors are trading down with health care stocks faring the worst and technology, property and energy also steeply lower.  

 

Figures

 

The S&P/ASX 200 index has plunged 74 points or 1.3 per cent to 5,559 at noon. On the futures market the SPI is 64 points lower. 

 

Economic news

 

Manufacturing activity moved into expansion territory last month for the first time since October on the back of stronger activity in the food, beverages and tobacco sub-sector. The Australian Industry Group reports its performance of manufacturing index lifted 1.7 points from contraction territory to 50.7 points which indicates expansion.  

 

Capital city dwelling values continued to rise over the last three months. RP Data reports values gained 1.1 per cent over the three months to the end of July, driven by strength in Sydney (up 2 per cent) and Melbourne (up 1.8 per cent). Canberra was also a standout performer (up 2.1 per cent) with while Adelaide dragged (down 2.6 per cent). The most expensive city was Sydney with a median dwelling price of $650,000 and the most affordable city was Hobart with a median dwelling price of $300,000.

 

Company news

 

Among the sea of red shares in Myer Holdings Limited (ASX:MYR) have risen amid speculation it could be a takeover target. The reports come following the successful $2.2 billion takeover of rival retailer David Jones Limited (ASX:DJS) by South African retailer Woolworths Holdings Limited (JSE:WHL) last month. Shares in Solomon Lew’s Premier Investments Limited (ASX:PMV) have also risen with reports naming the company as a likely suitor. Mr Lew has recently benefited from the sale of his stake in DJs and is poised to cash in from the takeover of Country Road Limited (ASX:CTY). Shares in Myer Holdings are trading 1.32 per cent higher at $2.31 at noon.

 

Fortescue Metals Group Limited’s (ASX:FMG) founder and Non-Executive Chairman Andrew Forrest has outlined plans for Austarlia’s welfare system. Mr Forrest’s proposed initiatives include rolling out a ‘healthy welfare card’ for all Australians on government benefits, excluding aged pensioners and veterans. Welfare recipients would be limited to purchasing basics and prohibited from buying goods such as alcohol. While the plans have been quick to attract controversy Prime Minister Tony Abbott claims the report is bold, ambitious and brave. Shares in Fortescue Metals Group have fallen 3.76 per cent to $4.75 at noon. 

  

Best and worst performers

 

All sectors all trading in the red: The sector with the smallest losses is telco services, losing 0.8 per cent to 1,893. Shares in Telecom Corp of New Zealand (ASX:TEL) have slipped 0.77 per cent and trading at $2.58. Shares in Telstra Corporation Limited (ASX:TLS) and M2 Group Limited (ASX:MTU) are also weaker. 

 

The worst performing sector is health care, retreating 1.8 per cent to 14,301. Shares in ResMed Inc. (ASX:RMD) have fallen 3.72 per cent, trading at $5.30. Shares in CSL Limited (ASX:CSL) and Greencross Limited (ASX:GXL) are also lower. 

 

Gold and the dollar

 

After sinking about $US13 overnight the price of gold is now trading at $US1,283 an ounce.

 

The Australian dollar hit a two month low this morning and has pulled back to $US0.9289.