MARKET TALK: S&P/ASX 200 Up 0.1%; Miners Sold On Rally

2nd Jul 2010 04:14

0314 GMT [Dow Jones] S&P/ASX 200 up 0.1% at 4243.2, fades from 4281.6 high as miners were sold on the rally because global macro concerns have eclipsed relief over the significant dilution of the proposed mining tax. BHP (BHP.AU) up 0.4% at A$37.24 from A$37.76 peak. Rio (RIO.AU) up 0.5% at A$65.45 from A$66.65 peak. AUD/USD is up 0.7% but the stock market, which is less liquid and potentially more reactive than the forex market, is showing signs of exhaustion. "Obviously the tax backdown is good news but at the end of the day, it becomes a macro story," says RBS Head of Sydney Sales Justin Gallagher. "If the globe is going down the economic toilet, it's not good for anyone. We need global economic growth to continue, otherwise a better tax outlook won't matter much to the market. There's also been some anticipation of this backdown, so there was always a chance that the reaction would be a bit of a flop. It's good that miners no longer have to worry about their competitiveness globally, and their ability to attract exploration projects has improved, but the world is not a better place, just because we have changed the taxation system. It all looks pretty tough because clearly, investors are looking at every market in a much more macro frame of mind." According to Dow Jones Newswires technical analysis, S&P/ASX 200 will remain very weak, unless it can close above the recent downtrend line at 4240.0. ([email protected]) Contact us in Singapore. 65 64154 140; [email protected] (END) Dow Jones Newswires July 01, 2010 23:14 ET (03:14 GMT)