Australian shares outlook - Slightly higher in cautious trade

Australian shares are expected to open slightly higher Tuesday though investors will remain cautious following a volatile session on Wall Street which ended with the Dow Jones Industrial Average higher.

The S&P/ASX 200 December futures ended its overnight session up 47 points at 6,660.0, suggesting a positive start to trading.

'This will be a wait and see day with commodities all down but there may be the same accumulation as yesterday with volumes picking up,' said Stuart Smith a private client advisor at Bell Potter Securities.

On Monday, Australian shares closed sharply lower following Friday's selloff on Wall Street
where investors were rattled by poor third-quarter earnings and the possibility of more bad news from the subprime mortgage market.

The S&P/ASX 200 closed down 129.0 points or 1.9 percent at 6,577.3. The All Ordinaries index fell 131.2 points or 2.0 percent to 6,592.1.

In New York, share prices finished a back-and-forth session higher Monday as investors overcame some of their nervousness about the credit markets and uneven earnings and found solace in the technology sector.

The Dow Jones Industrial Average rose 44.95 points or 0.3 percent to 13,566.97.

News Corp (NYSE:NWS) shares ended up 0.4 percent.

In London, share prices closed weaker for the fifth day out of the last six, with the heavyweight mining sector badly hurt, but a relatively mild fall on Wall Street helped ensure that the FTSE 100 finished well off session lows.

The benchmark index ended down 68.6 points or 1.1 percent at 6,459.3.

BHP Billiton (NYSE:BHP) fell 3.9 percent ahead of its September quarter production report released this morning and Rio Tinto lost 3.7 percent.

Crude oil prices fell on Monday. While demand for commodities was generally lower, news of a potential cease-fire between Turkish troops and Kurdish rebels also put downward pressure on energy prices. Light, sweet crude for November delivery fell 1.04 dollars to 87.56 dollars a barrel on the New York Mercantile Exchange.

Base metal prices fell again on the London Metal Exchange as investors moved away from risky assets such as commodities, concerned about the weakening US economy. Lead fell 3.6 percent while zinc dropped 2.9 percent .

The price of gold also eased, dragged down by a stronger greenback and a lower crude oil price. The most-active December gold contract fell 8.40 dollars to 760.0 dollars an ounce on the New York Mercantile Exchange.

(1 US dollar = 1.13 Australian dollars)
bruce.hextall@thomson.com
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