Obama declares economy “back from the brink”, shares gain ground: Economy roundup

US president Barack Obama has flagged a potential recovery for the country’s troubled economy, saying signs of stabilisation are beginning to emerge.

“When you look at the economy right now, I think it’s safe to say we have stepped back from the brink, that there is some calm that didn’t exist before,” Obama said at an event for the Democratic National Committee.

“We can’t rest on our laurels because we’ve got a lot of work to do in areas ranging from healthcare to education, to curbing dependence on foreign oil,” he said.

His comments came as new data suggested the US housing market and unemployment levels are starting to stablise.

Sales of new homes jumped by 0.3% in April, according to the Department of Commerce, with the number of individuals claiming jobless benefits dropped by 13,000 to 623,000 in the week ending 23 May.

Shares higher

Meanwhile, Wall Street jumped on the back of energy shares pushed by rising oil prices. The Dow Jones Industrial Average jumped 103.78 points or 1.25% to 8,403.80. Oil prices jumped to over US$65.

Back home, the Australian share market opened 0.8% higher due to the good leads from Wall Street. The benchmark S&P/ASX200 was up 40.3 points or 1.07% to 3,796 at 12.00 AEST. The Australian dollar recovered from yesterday’s drop, moving to US$78 cents.

NAB shares rose 1.8% to $22.03, while ANZ also jumped 2% to $15.68. AMP climbed 1.5% to $4.81 as Westpac jumped 0.7% to $18.56.

Share scams targetted

The Federal Government is considering placing warnings on offers from scammers who try to buy shares on the cheap from unsuspecting investors.

Corporate Law Minister Nick Sherry said today that these scammers, many of whom distribute unsolicited mail to buy up shares of smaller companies at very cheap prices, may face new regulations.

“The reform options I am releasing today reflect serious concerns by the Rudd Government and the community about unsolicited share offers – and I know this is a view shared by many industry groups, listed companies and consumer advocates,” Senator Sherry said.

ANZ class action

ANZ is facing a class action suit from US investors for allegedly misleading and deceptive conduct in regards to collapsed lender Opes Prime, according to The Sydney Morning Herald.

The action alleges ANZ made “numerous materially false and misleading statements”, including: “ANZ recognises the importance of effective risk-management to its business success”.

A spokeswoman for ANZ said that the bank rejected the lawsuit. “We consider the claim to be without any foundation whatsoever and we are working through a process to have the claim dismissed,” the spokeswoman said.

Myer cautiously upbeat

Meanwhile, Myer Group chief executive, Bernie Brookes told AAP that the department store is beginning to see signs of economic recovery emerge.

“We are bouncing along the bottom in department store retail and it’s upwards from here,” Brookes said at a business lunch in Sydney today. “I think we’ve bottomed out and we’re starting to show some good signs of recovery.

“We’re starting to see it in our business in areas such as furniture and homewares… and at some of the low socio-economic stores.”