Australian Markets Track Global Losses

Mayank Mehta, Chandrasekhar Atreya and Darlington Musarurwa
21 May, 2010
New York City

Stocks fell in Australia as investors fear widening euro-zone crisis may slowdown global economic recovery. The Australian dollar rebounded by 1.2%. Sigma Pharmaceuticals receives a takeover offer from an unidentified bidder. Fire at the Hobart smelting facility curtails 20% zinc production.

[R]6:00 PM Sydney, Australia – Stocks fell in Australia as investors fear widening euro-zone crisis may slowdown global economic recovery. The Australian dollar rebounded by 1.2%. Sigma Pharmaceuticals receives a takeover offer from an unidentified bidder. Fire at the Hobart smelting facility curtails 20% zinc production.[/R]

Australian stocks fell on macro worries leading the benchmark index to its lowest mark in ten months. The S&P/ASX 200 Index dropped as low as 1.4% before recovering to close down 0.3%.

The Australian dollar snapped its fall to rise as much as 1.2% after the Treasury said Secretary Timothy Geithner will visit UK and Germany next week to hold talks on the European debt crisis. The dollar jumped 1.4% against the yen snapping a six-day drop.

Sigma Pharmaceuticals Ltd, whose CEO and CFO quit recently, received a takeover offer for A$707 million at 60 cents a share, a premium of 71% over its current market value, and the directors are considering the offer, said the company in a statement today.

The company merged with Arrow Pharmaceuticals in 2005 to tap demand for generic medicines, according to the company’s website. The company was founded in 1912.

The Australian retailer, Woolworths Ltd is seeking to refinance A$3 billion of debts and may sell bonds by the end of 2012 to refinance these debts. This was stated by the company’s Group Treasurer Asrar Rahman while replying to questions from Bloomberg News.

The nation’s companies have about A$140 billion of debt due in 2011 and 2012, according to Fitch Ratings.

Nyrstar NV, the Belgian company exports zinc mainly to Asia from its smelter at Hobart, Tasmania where it has a production capacity of 260,000 tons per year. A recent fire in the smelter at Hobart has cut output by an estimated 20% according to the news from the company’s website.

The Hobart smelter sources most of its ore from the Zinifex Century mine in Queensland and Rosebery mine in Tasmania.

ASX 200 index in Australia decreased or 11.10 or 0.26% to 4,305.40 and of the stocks in S&P ASX 200 index, 58 increased, 135 declined and 7 were unchanged.

ASX Movers

Sonic Healthcare Limited led decliners in the S&P ASX 200 index with a loss of 20.2% followed by PaperlinX Limited 6.2%, Goodman Group 5.6%, Roc Oil Company Limited 5.5% and Gunns Limited 5.4%.

Sigma Pharmaceuticals Limited led gainers in the S&P ASX 200 index with a rise of 37.1% followed by Emeco Holdings Limited 10.0%, Pacific Brands Limited 9.8% and OZ Minerals Limited 5.5%.

Other Movers

Crown Limited, the casino owner, dropped 2.8% to A$7.61.

Newcrest Mining Limited, the gold producer, fell 2.9% to A$30.75.

Qantas Airways Limited, the airline, fell 0.8% to A$2.38.


Rio Tinto Limited fell 0.7% to A$61.80 after the mining company reportedly struck a lucrative deal with Japanese steelmakers to sell iron ore at twice the price from a year ago for the April-June period.

Sonic Healthcare Limited plunged 20.2% to A$10.07.