Sydney Drops; Weak Economic Conditions

Chandrasekhar Atreya
18 Aug, 2010
New York City

Stocks in Australia closed nearly flat after private survey showed weakening economic conditions and housing affordability index declined to near low. Economic growth slows in June. Potash Corp rejects BHP

[R]6:00 PM Sydney, Australia – Stocks in Australia closed nearly flat after private survey showed weakening economic conditions and housing affordability index declined to near low. Economic growth slows in June. Potash Corp rejects BHP’s unsolicited $39 billion offer.[/R]

The benchmark index in Sydney opened higher in the morning following the overnight gains in international markets but indexes closed flat despite a 3% slump in BHP Billiton.

The ASX 200 Index lost 0.05% or 2.1 points to close at 4,474.90.

Housing affordability is nearing a record low due to higher interest rates and rising home values in the quarter to June, a survey shows. The latest HIA-CBA Housing Affordability Report shows that affordability deteriorated in most capital cities and regional areas in the quarter to June.

The Housing Affordability Index conducted by HIA-CBA, fell 9.1% in the June quarter to be 32% lower compared to the same period in the prior year. The index combines interest rates, household incomes and home prices to determine the affordability conditions.

Economic growth rate in the nation slowed for the third straight month in June, a survey shows. The Westpac/Melbourne Institute leading index of economic activity was flat in June after falling 0.1 points in the month.

On an annualized basis, the growth rate declined to 6%, down from 7.4% in May.

Seasonally adjusted total hourly rates of pay, excluding bonuses, rose 0.8% in the quarter to June, the Australian Bureau of Statistics said Wednesday. The wage price index rose 3% from a year earlier.

Canada’s Potash Corp said its board rejected unsolicited $38.6 billion offer from BHP Billiton and adopted a shareholder’s rights plan.

Woodside Petroleum delivered a first half profit of A$1 billion but conceded that it would miss the year-end deadline of making a final decision on the expansion of its Pluto LNG project.

Woodside said it had initially targeted completed by the end of 2010 on expanding Pluto to avoid going head-to-head with Gorgon in a competition for skilled labor, CEO Don Volte said. The progress of Gorgon has not proceeded as anticipated and we now have a longer period of time, he said.

Gold gained on Wednesday and reached near six-week high on Tuesday as speculators horde gold and on persistent worries about the global economic health.

Despite facing tough second-half conditions in the mining and commercial property sectors, Coffey International, the professional services company reported only a marginal fall in full-year net profit.

Shipbuilders and steel mills have agreed to a 25% increase in the price of steel plates for the six months ending September 30, the first such rise in two years.

Resource News

Moly Mines awarded a five-year crushing contract to Perth-based Rapid Crushing and Screening for the Spinifex Ridge iron ore project output.

Dynasty Metals Australia made two key agreements which formalize the relationship between the company and Chinese steel producer Hebei Xinghua Iron & Steel.

Scotgold reported that outcrop sampling in the River Orchy in Scotland returned exceptionally high gold and silver values.

Latrobe Magnesium said its results from retort work conducted on the hydromet trials set 10-material revealed a magnesium metal recovery rate of about 78%.

Laguna Resources said it has signed an option agreement to acquire the Cerro Iman gold project in northern Chile.

Gainers & Losers

Elders Ltd led gainers in the ASX 200 with a gain of 10.71% to A$0.62 followed by Lynas Corp Ltd 5.64% toA$1.03 and Transfield Services Ltd 4.94% to A$3.4.

Cudeco Ltd led decliners in the index with a fall of 48.85% to A$2.45 followed by Gunns Ltd 9.29% to A$0.635 and APN News & Media Ltd 8.54% to A$1.875.