Sydney drops; RBA Maintains Growth Forecast

Chandrasekhar Atreya
06 Aug, 2010
New York City

Stocks in Australia declined a fraction. RBA holds its forecast for economic expansion and said that resource sector expansion will determine the progress. Construction activity contracts further in July. Aston IPO is downgraded.

[R]6:00 PM Sydney, Australia – Stocks in Australia declined a fraction. RBA holds its forecast for economic expansion and said that resource sector expansion will determine the progress. Construction activity contracts further in July. Aston IPO is downgraded.[/R]

Australian stocks traded lower let down by weakness among financial stocks and following a flat finish in international markets. The market gained during the day to close marginally lower.

The ASX 200 Index in Sydney lost 0.01%or 0.4 to close at 4,566.1.

The Reserve Bank of Australia maintained its forecasts for strong economic growth but said much depends on the resource sector’s timetable for starting major projects. In its quarterly statement of monetary policy on Friday, the central bank said it expects Australia’s economy is estimated to grow to 3% over the year to June 2010, before picking up speed to grow at 4% in the year to December 2012.

“The main downside risk on the domestic front is that the forecast pick up in private demand occurs more slowly than expected and does not fully offset the contraction in public spending over the next few quarters,” the statement said.

Activity in Australia’s construction industry contracted further in July with weakness in all sectors, particularly engineering and commercial construction, a survey shows.

The Australian Industry Group/Housing Industry Association performance of construction index (PCI) fell 3.1 to 43.3in July after a fall in June. The survey found the contraction was partly due to long lead times between development and construction of projects.

Engineering construction activity fell 16.7 points to 36.2 and commercial construction dropped to 35.3.

Aston IPO previously priced at A$8.20 and valued at A$1.5 billion has been cut down to A$5.96 per share.

Rio Tinto Group CEO Tom Albanese said the world’s third-largest mining company is planning to increase spending 50% next year after profits surged and is also considering acquisitions and mergers.

“Over the next 18 months we will be spending about $13 billion to further build these businesses. It is not for today’s market but for those markets down the road two to ten years,” Albanese said yesterday in a Bloomberg TV interview in London.

Australian property developer Lend Lease Group has launched a solar power unit to capture growing need for renewable energy in the property sector and has formed supply and distribution partnerships.

Resource News

Range River Gol identified high-grade shallow mineralization at the Sarah and Ramornie North prospects, Mt Morgans, over strike lengths of over 100 meters and 200 meters respectively.

FerrAus Ltd’s spin off Lawson Gold announced a drilling program as it debuts on the ASX on Thursday.

Oil and gas producer AWE received some much needed good news, with the first set of exploration results from its recently acquired Sugarloaf shale gas project in Texas returning strong numbers.

Meridian Minerals said there’s very high-grade lead and zinc mineral concentrates at Kapok West mineral resource on the Lennard Shelf project in WA.

Aurox Resources said its shareholders have overwhelmingly approved a merger with Atlas Iron for a deal worth A$143 million. Aurox says 100% of the votes cast on the resolution were in favor of the merger, with 99.9% of the shareholders voting.

Gainers & Losers

Elders Ltd led the gainers in the ASX 200 with a gain of 7.45% to A$0.505 followed by Gindalbie Metals Ltd 5.56% to A$1.045 and Aristocrat Leisure Ltd 4.31% to A$3.63.

Aquarius Platinum Ltd led the decliners with a loss of 4.18% to A$4.58 followed by Mirabella Nickel Ltd 4.09% to A$2.11 and Perseus Mining Ltd 2.92% to A$2.33.