Australian Confidence Rises; Stocks Fall

Chandrasekhar Atreya
11 Aug, 2010
New York City

Stocks in Australia declined after weak economic data from the U.S. and China. Consumer confidence rose for the second month in a row. Commonwealth Bank reported a 42% surge in full year profit but issued a cautious outlook.

[R]6:00 PM Sydney, Australia – Stocks in Australia declined after weak economic data from the U.S. and China. Consumer confidence rose for the second month in a row. Commonwealth Bank reported a 42% surge in full year profit but issued a cautious outlook.[/R]

Australian indexes closed sharply lower after weaker-than-expected results from Commonwealth Bank and economic data from China and the U.S.

The ASX 200 Index lost 1.88% or 85.20 to close at 4,455.50.

Consumer confidence in Australia surged for the second straight month in August, countering signs of business uncertainty. In a survey of 1,200 people conducted between August 2 and August 8 by Westpac Bank and Melbourne Institute released Wednesday showed the index of consumer sentiment rose 5.4% in August to 119.2, which follows the rise of an 11.1% jump in July.

The Australian Petroleum Production & Exploration Association today held talks on the creation of an industry-wide agreement which will allow faster response times in the event of an oil spill.

Commonwealth Bank of Australia reported a 42% rise in its full year net profit to A$6.1 billion, despite what it claimed were volatile and unpredictable market conditions. Net income for half year ended June 30 climbed to A$2.75 billion. The bank also said first half of this fiscal ending December 31, maybe weaker than expected because of concerns over global market recovery.

Melbourne-based Orica Ltd sold $600 million of bonds to private investors in the U.S. The company will use the proceeds to repay bank loans and commercial paper, allowing it to fund growth opportunities by re-borrowing through these facilities, the company said in its regulatory filing today.

Mt Gibson Iron Ltd earned net profit of A$132.4 million in the year to June 30, up 211% from A$42.62 million in the prior year.

Aussie Q Resources said recent drilling at Greater Whitewash in central Queensland confirmed the consistency of molybdenum and copper grades in widths along the 2.5 kilometer length.

Resource News

Red Fork Energy completed the plant upgrade work at the Wagoner “A” Station of its 100% owned East Oklahoma project.

Giralia Resources reported on progress made at its Daltons-Mt Webber iron ore project.

Eleckra Mines received firm commitments from professional and private investors to raise A$2.46 million with a placement of 29 million shares at 8.5 cents each.

Hudson Resources’ Sovereign Gold signed an agreement acquiring two prospective tenements in the Rocky River-Uralla goldfield in NSW.

Extract Resources said an increase in resources at its Rossing South project in Namibia makes the deposit the sixth-biggest in the world. Extract upgraded the size of the resource to 257 million pounds, a tenfold increase from July 2009, it said in a filing to the stock exchange in Australia.

Gainers & Losers

SMS Management & Technology Ltd led the gainers in the ASX 200 with a gain of 2.62% to A$6.27 followed by Alumina Ltd 2.45% to A$1.67 and Aquila Resources Ltd 2.25% to A$8.19.

Computershare Ltd led the decliners with a fall of 10.6% to A$8.94 followed by Sundance Resources Ltd 9.38% to A$0.145 and Mincor Resources NL 7% to A$1.86.