Shares lose ground, Obama examines financial sector reforms: Economy round up

The Australian sharemarket has dropped today after negative leads from Wall Street and falling commodity prices.

The benchmark S&P/ASX200 index was down 66.7 points or 1.7% to 3,950.5 at 12.15 AEST. The Australian dollar also dropped to 80 US cents after investors flocked towards the US dollar.

NAB shares have dropped 4.7% to $22.02 as AMP dropped 1.8% to $5.05. Westpac lost 0.4% to $19.09, while Commonwealth Bank gained 1.4% to $37.30.

Westpac has apologised for an error that allowed details of its investors to be published in a document available on the ASX. A bank spokesman said that the error has been fixed and that it has contacted those investors affected.

OZ Minerals has said in a statement that it has not yet received any proposal from companies that it would consider a better alternative to its current arrangement with China-based Minmetals.

“OZ Minerals notes the recent media speculation about possible recapitalisation proposals,” the mining company said in a statement to the ASX. “OZ Minerals has not received a recapitalisation proposal which it considers to be a superior alternative to the China Minmetals transaction.”

In the US, Wall Street dropped on data that showed the services industry contracted for an eighth consecutive month. The Dow Jones Industrial Average dropped 65.63 points or 0.75% to 8,675.24.

Meanwhile, the Obama Administration is rumoured to be introducing widespread reforms to financial legislation this month.

Reuters reported that according to a high-level source, the 17 June release date of the proposal will see new frameworks for how banks, hedge funds, securities and other financial institutions are regulated.

The White House and Congress has indicated both are aiming for financial regulation changes before the end of the year, with the Federal Reserve set to take a key role in the new regulatory system

Chairman Ben Bernanke told a congressional committee overnight that “the exact structure of the arrangements, I think, remains to be discussed” when quizzed about the Federal Reserve’s future role.

Meanwhile, Bernanke said that he is optimistic the US recession will end by the end of the year but warned against high budget deficits.

“Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance,” he told the House of Representatives’ Budget Committee.

“Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth.”