Australian Stocks Track Commodities Higher

Darlington Musarurwa
21 Apr, 2010
New York City

The benchmark index in Australia closed higher tracking gains in the international markets. Resource stocks closed higher with the rise in commodities prices. The Australian dollar edged up and gained 0.9% in two days. The index of leading indicators estimated expanding economy.

[R]3:00 AM New York, 7:00 PM Sydney – The benchmark index in Australia closed higher tracking gains in the international markets. Resource stocks closed higher with the rise in commodities prices. The Australian dollar edged up and gained 0.9% in two days. The index of leading indicators estimated expanding economy.[/R]

The benchmark index in Australia closed 0.6% higher tracking gains in international markets. Resource stocks closed higher after commodities prices increased. ANZ is looking to acquire a majority stake Korea Exchange Bank.

An index of leading indicators forecasted expanding economy, largely on the improved global economic climate.

Commodity stocks also pushed stocks higher as gold prices advanced 0.5% to $1,145 per ounce and crude oil prices edged up 2% to $83.5 per barrel.

In Sydney trading ASX 200 Index gained 0.6% or 28.5 to 4,954.30.

Of the ASX 200 index stocks, 149 rose, 35 fell, and 16 were unchanged. Karoon Gas Australia led advancers in the index shares with a rise of 6.5% followed by Sundance Resources climbing 6.3%.

The Australian dollar jumped 0.1% to 93.29 U.S. cents.

Leading Index Rises 7.2% in February

The Westpac–Melbourne Institute Leading Index, which gauges the likely pace of economic activity three to nine months into the future, rose at an annualized 7.2% to 257.8 in February, while the Coincident Index was 3.6% at 247.9 in the same month, also above its long term trend of 3.2%.

According to Westpac chief economist Bill Evans growth in the Australian economy may expand through 2010 to well above trend by the year end.

Global economic factors contributed 4.4 percentage points of the 5.2 percentage points increase in the last six months.

Commodity prices rose 2.2 percentage points, US industrial production 1.7 percentage points, overtime worked 0.5 percentage points, productivity 0.6 percentage points and corporate profits 1.1 percentage points.

However, the all ordinaries index fell 0.6 percentage points, real money supply 0.7 percentage points and dwelling approvals 0.2 percentage points.

The report also notes that the 2.9 percentage point increase in the growth rate of the coincident index was due to increases in the labour market 1.7 percentage points, household incomes 0.8 percentage points and production 0.7 percentage points.

“We expect that the Bank (Reserve Bank of Australia) is likely to tighten again in May, or June at the very latest, restoring rates to ""normal"" before pausing to assess the interaction of the boost to incomes from the commodity boom and the offsetting effect of rate hikes and an unusually cautious consumer on the growth outlook,” said Evans.

ANZ Considers Stake in Korea Exchange Bank

Australia New Zealand Banking Group is considering a A$4.1 billion bid for Lone Star’s 51% stake in Korea Exchange Bank, according to Dow Jones newswire.

Lone Star is selling its shares in KEB and has appointed Credit Suisse for the transaction.

ASX Movers

GrainCorp Limited led decliners in the S&P ASX 200 index with a loss of 1.8% followed by losses in Australian Agricultural Company Limited of 1.8%, in Wotif.com Holdings Limited of 1.7%, in Macarthur Coal Limited 1.3% and in Ausenco Limited 1.3%.

Karoon Gas Australia Ltd led gainers in the S&P ASX 200 index with a rise of 6.5% followed by gains in Sundance Resources Limited 6.2%, in Mirabela Nickel Ltd of 5.5% and in Infigen Energy of 5.2%.

Other Movers

Australia and New Zealand Banking Group Limited added 1.0% to A$25.40 and the company is looking to acquire majority stake in Korea Exchange Bank.

BHP Billiton plc fell 0.1% to A$42.73.

CSR Limited added 1.1% to A$1.70 after the building products maker said it is still in discussions with China based Bright Food regarding its conditional, non-binding offer to acquire its Sucrogen business.

Westpac Banking Corporation added 1.2% to A$28.20.