Rising Inflation Expectations in Australia

123jump.com Staff
15 Apr, 2010
New York City

Australian stocks closed higher tracking gains in the U.S. however the gains were limited after inflation expectations rose in April. Macarthur Coal rejects revised bid from New Hope citing lower cash component. Bank of Queensland Limited said first half net nearly doubled.

[R]3:00 AM New York, 7:00 PM – Australian stocks closed higher tracking gains in the U.S. however the gains were limited after inflation expectations rose in April. Macarthur Coal rejects revised bid from New Hope. Bank of Queensland Limited said first half net nearly doubled.[/R]

The Australian stock index rose following gains in the U.S. and rising resource stocks as crude oil prices advanced 0.4%.

However, gains were limited after a private report showed that the country’s consumer inflationary expectations rose in April.

In Sydney trading ASX 200 Index increased 0.1% or 7.2 to 5,001.90.

Of the ASX 200 index stocks, 96 gained, 81 fell, and 23 were unchanged. Roc Oil led gainers in the index shares with a rise of 7.2% followed by Energy World Corp. gaining 5.9%.

Other commodity stocks gained as well. Sundance Resources edged up 3.2% to A$0.16 and Aquarius Platinum jumped 2.5% to A$7.53.

The Australian dollar fell 0.04% to 93.44 U.S. cents.

Inflation Expectations Rise in April

The Melbourne Institute Survey of Consumer Inflationary Expectations indicated today that the median expected inflation rate rose 4.1% in April from 3.2% a month ago.

Also the proportion of consumers expecting inflation to be within the RBA’s 2% to 3% range fell to 15.9% in April from 18.6% in March, declining for second month in a row.

A Research Fellow at the Melbourne Institute Dr Michael Chua said, “This month’s report indicates inflation pressure is mounting after a relatively stable period. The jump in the median inflation rate is significant and suggests that consumers expect demand to grow at a faster rate than changes in production.”

Macarthur Coal Rejects New Hope’s Revised Bid

Macarthur Coal today rejected the revised takeover bid from New Hope and indicated that it will proceed with its shareholder vote for the takeover of Gloucester Coal on Monday.

New Hope, which is offering 2.7 of its shares for every Macarthur share yesterday, topped the bid with a cash alternative of A$14.50 per share.

However, the cash alternative was subject to a cap of A$950 million.

Macarthur Coal chairman Keith De Lacy said the board has instead recommended the takeover of Gloucester Coal.

The resource company has recently been the target of U.S. firm Peabody Energy and speculation that Xstrata may make a bid for the company.

Iron Ore Suppliers Dictate to Consumers, CISA

Dow Jones Newswires reported that China Iron and Steel Association chairman Luo Bingsheng said today iron ore miners such as BHP Billiton, Rio Tinto and Brazil’s Vale are exercising a high degree of monopoly of seaborne iron ore.

Luo also noted that the suppliers are no longer negotiating prices but dictating them to due to high demand.

BOQ H1 Profit Rises 15%

Bank of Queensland announced today that normalized first half profit for the period ended in February rose 15% to A$97.2 million from the same period a year earlier.

Net profit soared to $90.9 million from A$46.3 million in the comparable year ago period.

The net interest margin rose by 13 basis points to 1.65% in the period from a year ago.

Retail deposits rose 5%, while loans under management advanced 10%.

The lender will pay an interim dividend of 26 cents per share, the same as last year.

ASX Movers

Mermaid Marine Australia Limited led decliners in the S&P ASX 200 index with a loss of 3.8% followed by losses in Eastern Star Gas Limited of 3.3%, in SEEK Limited of 3.0%, in Elders Limited 3.0% and in David Jones Limited 2.9%.

Energy World Corporation Limited led gainers in the S&P ASX 200 index with a rise of 6.8% followed by gains in Sundance Resources Limited 6.4%, in Roc Oil Company Limited of 6.0% and in Ausenco Limited of 4.7%.

Other Movers

Bank of Queensland Limited added 0.2% to A$12.08 after the bank said first half net interest income rose 21.4% to A$275.0 million from A$226.6 million a year ago. Net profit for the first half rose 96% to A$90.9 million or 39.0 cents per diluted share compared to net profit of A$46.3 million or 23.7 cents per share a year ago.

Macarthur Coal Limited decreased 0.5% to A$15.41 after the engaged in exploration announced that it concluded that: the revised New Hope Corporation Limited proposal does not represent an adequate premium for control. The cash alternative is capped at only A$950 million which means that if all shareholders were to elect the cash alternative, shareholders would receive cash for approximately only 26% of their Macarthur shares and potentially be forced to receive New Hope shares.

New Hope Corporation Limited the engaged in mining and sale of coal rose 0.9% to A$5.20.

Rio Tinto Limited rose 0.3% to A$80.39 after the iron ore production in the Pilbara region jumped 48% in the first quarter on strong Chinese demand.

Woodside Petroleum Ltd the oil and gas producer advanced 1.3% to A$47.48.