Sydney Gains; 7-Month Rise in PMI

Chandrasekhar Atreya
02 Aug, 2010
New York City

Stocks in Australia traded higher on strong earnings outlook. Housing boom slows in June. Manufacturing activity picks momentum in July. Most exporters do not use hedging as a tool as they expect the Aussie dollar to trade high.

[R]6:00 PM Sydney, Australia – Stocks in Australia traded higher on strong earnings outlook. Housing boom slows in June. Manufacturing activity picks momentum in July. Most exporters do not use hedging as a tool as they expect the Aussie dollar to trade high.[/R]

Australian stocks traded higher and closed up 1% despite the weak closing in international markets.

The ASX 200 Index gained 1.07% or 48.10 to close at 4,541.60 in Sydney today.

Australian housing boom came to an end in June, weighted down by rising interest rates, deteriorating affordability and global financial turmoil. Sales of new homes fell 5.1% in June, the second straight month of decline, as higher mortgage rates hit demand while tight credit restrained supply, an industry survey showed today.

Manufacturing activity picked up speed in July as new orders and output expanded strongly, although employment turned lower after three months of growth, as a survey showed today.

The performance of manufacturing index gained 1.5 points to 51.4 in July, the Australian Industry Group and PricewaterhouseCoopers said in a survey released in Canberra today. This was the seventh straight month of expansion in manufacturing supporting the central bank’s view that economy is expanding and strengthening.

A gauge of new orders gained 5.5 points to 56.7 and a sub-index of production gained 3.8 points to 57.3, while employment dropped 5.3 points, the report showed.

Less than half the exporters are prepared to hedge against a possible decline in the Aussie dollar because they don’t know what hedging is, a report shows.

The Commonwealth Bank Aussie Dollar Barometer shows only 40% of importers plan to hedge their exposure to the Australian dollar, while most businesses expect the unit to be at 92 cents by the end of 2010.

U.S.-listed fleet company Wright Express has agreed to pay $353 million in cash to snap up the bulk of Retail Decision’s Australian operations, a transaction that’s expected to be immediately accretive.

Resource News

Magnetic Resources has received the analytical results from its second reverse circulation drilling program testing near Corrigin in WA.

CGA Mining reports the Masbate operation continued to improve with a 15% increase in ore tonnage milled to 1.35 million tons in the June quarter.

YTC Resources says the ongoing exploration drilling program at the Hera gold project has identified oxide gold mineralization for the first time.

Eldorado Gold reported net income of $60.5 million or 11 cents per share in the second quarter ended June 30.

Tap Oil lifted its oil and gas revenue 55% to $20.25 million in the quarter ended June 30.

Copper miner Universal Resources has approved the development of its $46 million Outokumpu project in eastern Finland following the completion of a definitive feasibility study for the refurbishment of the Luikonlahti mill.

Gainers and Losers

Linc Energy Ltd led the gainers in the ASX 200 with a gain of 18.5% to A$1.89 followed by Energy World Corp Ltd 9.89% to A$0.5 and OM Holdings Ltd 6.03% to A$1.495.

Downer EDI Ltd led the losers with a decline of 6.24% to A$4.660 followed by Platinum Australia Ltd 2.01% to A$0.73 and Hills Industries Ltd 1.81% to A$2.170.