Index in Australia Soars 1.9%, Confidence Up

Chandrasekhar Atreya
30 Aug, 2010
New York City

Stocks in Australia gained after the U.S. stocks rose on positive comments from the Fed Chairman. Sales of new homes fell in July for the third month in a row. Farmers reported in a survey that business confidence is on the rise in August. Business profit surges in the quarter to June.

[R]6:00 PM Sydney, Australia – Stocks in Australia gained after the U.S. stocks rose on positive comments from the Fed Chairman. Sales of new homes fell in July for the third month in a row. Farmers reported in a survey that business confidence is on the rise in August. Business profit surges in the quarter to June.[/R]

Stocks in Australia traded higher tracking the gains in the U.S. U.S. Federal Reserve Chairman Benjamin S. Bernanke indicated conditions are in place for the U.S. economy to recover and the Fed is prepared to expand its balance sheet if needed.

The Australian benchmark index shot up 1.85% at noon on Monday with miners and bankers leading the rally. The ASX 200 Index in Sydney rose 1.89% or 82.60 to close at 4,452.70.

The number of new homes sold fell in July, for the third straight month, a report showed.

The latest HIA/Jeld-Wen New Homes Sales Survey of Australia’s large residential builders showed that the number of new homes sold fell 7%, the third consecutive monthly fall in July. Sales fell for the three months to July by 8% and 2% from a year earlier in the month.

Detached house sales fell by 7.3% while sales in the multi-unit sector fell by 4.1%. New detached home sales fell 12.9% in Victoria, 7.6% in Queensland, 3.1% in New South Wales and 2% in Western Australia.

Business confidence among farmers in Australia reached a two-and-a-half year high in August thanks to rising commodity prices and winter rains across most states.

Rabobank national quarterly survey of 1,300 farmers noted 37% of farmers are expecting conditions to improve over the next 12 months. This sentiment was up 29% in May, the highest level since March of 2008, the global rural lender said Monday.

Business operating profits in the quarter ended June surged in Australia, a report said.

Gross operating profits of companies at current prices, rose 18.9% in the quarter to June, seasonally adjusted, and up 27.5% over the year to June, the Australian Bureau of Statistics said Monday. Profits at mining companies gained 62.7%, builders gained 30.5% and banks and insurers climbed 28.9%, the report showed.

U.S. oil explorer Apache widened its partnership with Santos, committing to the joint development of the Halyard and Spar gas fields in the Carnarvon Basin.

Transfield Services Ltd won a contract for $33 million to expand Caltex Australia’s fuel terminal at Port Hedland in Western Australia’s northwest.

After a fairly dismal start to M&A deals in this year, the value of deals launched in August has been worth more than the previous three months combined.

Copper cathode producer, Finder Resources said it’s A$20.95 capital raising plan for development of its Indonesian Wetar Copper Project was fully subscribed.

Rio Tinto said it will boost production by 15 million tons at its Hope Downs iron ore joint venture with Hancock Prospecting by investing $1.6 billion.

Resource News

Aragon Resources returned results for an intersection of 2.9 meters at 26.55 g/t gold from 728.1 meter targeting southern margins of the high grade Great Fingall Reef in Western Australia.

Central Petroleum is in the process of drilling the Johnstone West 1 well within EP 115 and has called for joint venture resource companies to fund the drilling works.

Jabiru Metals reported a net profit of A$17.6 million in the year ended June 30 compared with a net loss of A$62.3 million in the prior year.

Enterprise Metals said it located scattered outcrops of Archaean quartz-magnetite/banded iron formation at its Burracoppin project.

Meridian Minerals intersected additional high-grade lead and zinc mineralization at the Kapok West Prospect on the Lennard Shelf project.

Victory West Moly can exercise its right to acquire within the next 60 days, subject to due diligence, Oceantide Investment’s rights to a highly prospective DSO nickel project in south Sulawesi, in Indonesia.

Gainers & Losers

Kagara Ltd led the gainers in the ASX 200 with a rally of 10.92% to A$0.66 followed by Carnarvon Petroleum Ltd 10.77% to A$0.36 and Isoft Group Ltd 10% to A$0.165.

ASX Ltd led the decliners in the index with a fall of 3.14% to A$29.6 followed by Telecom Corp of New Zealand Ltd 0.95% to A$1.57 and Extract Resources Ltd 0.78% to A$6.34.