Australian GDP Expands 0.5% in the First Quarter

Mayank Mehta, Chandrasekhar Atreya and Darlington Musarurwa
02 Jun, 2010
New York City

The Australian dollar and stocks fell even as the Bureau of Statistics declared GDP expanded in the first quarter. Tenet Healthcare eyes Healthscope to tap private care market in Australia. Insurance Australia shares slump after cut in margin outlook. Metcash

[R]6:00 PM Sydney, Australia – The Australian dollar and stocks fell even as the Bureau of Statistics declared GDP expanded in the first quarter. Tenet Healthcare eyes Healthscope to tap private care market in Australia. Insurance Australia shares slump after cut in margin outlook. Metcash’s net increases 12.4% to $192 million.[/R]

ASX 200 index in Australia decreased 0.54% or 23.90 to 4,389.20 and of the stocks in S&P ASX 200 index, 37 increased, 152 declined and 11 were unchanged.

GDP grew by 0.5% in the first quarter through March confirming Australia’s status as one of the stronger economies of the developed world. This was the fifth straight quarter of GDP growth for the country. The figures were released by the Bureau of Statistics in Sydney today.

Government investment in infrastructure including schools grew 11.6% in the first quarter through March compared to the previous quarter, while household spending slowed to 0.6% from 0.9% in the previous quarter, as per the report.

The dollar fell to 82.89 U.S. cents at 3:13 p.m. in Sydney today after rising to as much as 83.67 U.S. cents around noon. It closed at 83.12 cents in New York yesterday.

Tenet Healthcare Corp, the third-largest publicly held U.S. hospital chain with 49 facilities, confirmed today that it is in talks for a possible purchase of Healthscope Ltd. Recent volatility in the trading of Tenet shares prompted the company to confirm the discussions.

AngloGold Ashanti Ltd, the world’s third largest gold producer, has expressed anxiety over the proposed super profit resources tax by confirming that it will cut its exploration spending in Australia if the proposal is approved.

“Our exploration spending of 10% to 15% in Australia from our global spend will not be allocated here if the resource tax is approved in its current form,” said Mark Cutifani, CEO of the Johannesburg-based AngloGold on phone from Canberra, where he is attending the annual conference hosted by the Minerals Council of Australia.

The proposed resource tax on super profits will give us more revenue, senior Treasury official David Gruen said as the government started it ad blitz in favor of the tax.

“If you get rid of royalties, rebates on royalties and introduce a tax which is more practical, you can generate more revenue while reducing distortions, and that’s the point of this tax,” said David Gruen, Executive Director of the Treasury’s macroeconomics group, while addressing a senate committee today.

Western Australia’s Mines and Petroleum Minister Norman Moore said yesterday that the state is considering a legal challenge to the tax.

Western Australia which accounts for 62% of the mineral production, 73% of natural gas and 64% of the crude oil and condensate will suffer the most if investments are withdrawn since the state has about A$170 billion of projects in the investment pipeline over the next five years according to the state government.

ASX Movers

Gunns Limited led gainers in the S&P ASX 200 index with a rise of 4.6% followed by Sundance Resources Limited 3.8%, Primary Health Care Limited 3.2% and Downer EDI Limited 2.8%.

iSOFT Group Limited led decliners in the S&P ASX 200 index with a loss of 26.7% followed by Ausenco Limited 8.6%, Emeco Holdings Limited 7.4%, Carnarvon Petroleum Limited 7.2% and Platinum Australia Limited 6.9%.

Other Movers

BHP Billiton plc fell 1.0% to A$37.78 after the mining company’s joint venture started its diamond drilling program.

Commonwealth Bank of Australia fell 1.0% to A$50.45 after Anvil Mining Limited announced that Commonwealth Bank of Australia and its subsidiaries are interested in 10,124,566 shares of Anvil Mining, representing 6.73% of the total voting power.

Healthscope Limited decreased 0.5% to A$5.54 after the hospital operator confirmed it is engaged in preliminary discussions regarding a potential acquisition by Tenet Healthcare Corp.

Insurance Australia Group Limited declined 6.3% to A$3.39 after the insurer announced that due to a significant deterioration in UK claim experience, in particular bodily injury claims, it is conducting a further independent actuarial review of its UK business. As a result, in fiscal 2010, the Company expects to recognize an associated one-off, pre-tax charge of approximately $365 million.

Metcash Limited added 2.0% to A$4.02 after the grocery wholesaler reported full-year net profit rise of 12.4% and forecast up to 8% earnings growth in the current fiscal year. Company said on Tuesday net profit for the year to April 30 was A$227.6 million ($192.25 million), up from $202.5 million in the previous corresponding period.

Rio Tinto Limited the mining company fell 0.2% to A$66.74.