Home Loan Approvals Drop in Australia

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
09 Jun, 2010
New York City

Australia

[R]6:00 PM Sydney, Australia – Stocks in Australia traded lower on the continued euro-zone worries and declining confidence in the mining sector. Home loan approvals dropped 1.8% in April. Treasury panel says it is examining the resources super profit tax. Chalco has till June 30 to submit feasibility report to Queensland.[/R]

ASX 200 index in Australia decreased 0.31% or 13.40 to 4,367.80 and of the stocks in S&P ASX 200 index, 63 increased, 115 declined and 22 were unchanged.

Australia’s consumer confidence fell 5.7% in June to 101.9 points, from May, according to a survey conducted by Westpac Banking Corp and Melbourne Institute and released in Sydney today.

The survey was conducted between May 31 and June 6 and comes on top of yesterday’s report that the business confidence also dropped in May. The government is scheduled to publish the latest unemployment figures tomorrow.

Consumers in Australia should be aware that increasing indebtedness could push the economy to the level plaguing some European nations today, central bank Governor Glenn Stevens said while addressing a gathering organized by the Western Sydney Business Connection.

“However well we have coped with recent events, by the time markets take notice and respond seriously, which will be usually in bad times, the problem may have become pretty big,” he said at the gathering.

He also stressed that the government has taken several steps to lower its debt avoid the debt trap that Greece is facing.

Australian home loan approvals to build or buy houses and apartments slipped 1.8% to 47,669 from March, when approvals declined a revised 2.9%, said the Statistics Bureau in Sydney today.

Borrowings have started slowing from the fourth quarter after the government started reducing A$21,000 grants to first-time buyers of newly built dwellings to A$7,000 on Jan 1, in two steps.

Aluminum Corp of China Ltd, China’s biggest aluminum producer, is pursuing plans to develop the A$3 billion Aurukun bauxite deposit in Queensland state, after winning the right to develop the deposits in 2006. The company has till June 30 to submit the feasibility report for the project.

“We are pushing forward with the project in accordance with our agreement with the state of Queensland. We are in close contact and will reach a mutual understanding under business principles,” Zhao Zhengang, General Manager of overseas investment at the company said over phone from Beijing today.

The Australian government will address the issues raised by the resources sector about the design of the proposed super profits tax, said Assistant Treasurer Nick Sherry.

“The Treasury-led panel is talking to companies to resolve the design of the tax in a way that will best deliver on the aims of the super profits tax,” Sherry said in a speech note sent for his address to the Institute of Chartered Accountants of Australia forum in Adelaide today.

ASX Movers

Avoca Resources Limited led gainers in the S&P ASX 200 index with a rise of 6.4% followed by Perseus Mining Limited 4.9%, St Barbara Limited 4.4% and The GPT Group 3.8%.

Elders Limited led decliners in the S&P ASX 200 index with a loss of 8.1% followed by Energy World Corporation Limited 7.0%, Gunns Limited 6.5% and iSOFT Group Limited 5.3%.

Other Movers

Avoca Resources Limited gained 6.4% to A$2.31 after the gold explorer said Wednesday its Higginsville mining reserve has increased to 803,000 ounces of gold.

St Barbara Limited added 4.4% to A$0.35.

BHP Billiton plc fell 0.4% to A$36.86 after the company notified Japanese steelmakers that they want to raise iron ore prices by 22% to 23% in the third quarter beginning in July.

Newcrest Mining Limited rose 0.8% to A$33.46 after the gold producer said it its schedule to complete its $8 billion takeover of Lihir Gold.

Rio Tinto Limited fell 1.6% to A$65.63 as investors turn cautious on the mining sector stocks on rising tax prospects.