Sell-off Grips Sydney Stocks; Business Confidence Declines

Chandrasekhar Atreya
12 Oct, 2010
New York City

Australian shares closed lower in a broad sell-off after business confidence fell in September even though business conditions index rose. Karoon Gas proposes to list its South American asset in a public offering in Brazil. Conquest Mining is looking to raise as much as $100 million.

[R]6:00 PM Sydney, Australia – Australian shares closed lower in a broad sell-off after business confidence fell in September even though business conditions index rose. Karoon Gas proposes to list its South American asset in a public offering in Brazil. Conquest Mining is looking to raise as much as $100 million.[/R]

Stocks in Sydney trading steadily declined in trading and the benchmark index dropped 1.7%. The slide started in the morning after the release of confidence data.

The ASX 200 Index fell 1.69% or 79.30 to close at 4,618.20 and the dollar edged lower to 98.03 U.S. cents.

Business conditions improved in September despite a dip in confidence, as forward orders showed strength in the system, according to a NAB survey.

The National Australia Bank’s business confidence index fell to 10 in September from 11 in August, while business conditions index rose 2 points to 7 in September.

The economy showed a mixed pattern, with conditions for mining and transport were better than conditions in retail and manufacturing. But in a sign of strength, forward orders for business lifted strongly in September, keeping the orders pipeline strong.

Prices of houses in Sydney, Perth and Adelaide are expected to increase 20% in the next three years, but annual double digit growth is over, a housing report predicted.

While tight supply and strong migration are driving the growth in Sydney, the imminent resources boom is set to keep dwelling prices firm in Perth, the BIS Shrapnel Housing Outlook 2010-13 shows.

Prime Minister Julia Gillard said while addressing the Queensland Media Club in Brisbane on Tuesday that the rising Australian dollar was putting pressure on exporters making it important for the country to diversify the economy.

“If the emerging economies continue to grow, while Europe and the U.S. stagnate, then the gap between global demand for our mining and energy compared to our manufactured goods and our services would continue to widen. And while the consumers and capital-intensive industries reap the real benefits from a strong dollar, the upward pressure on our currency makes life even harder for exporters of services and manufactured and farm goods,” Gillard said in the address.

Do-it-yourself superannuation funds are using cash stockpiled in the global financial crisis to buy properties in record numbers following clarification of new laws that allow the funds to borrow or invest.

Fortescue Metal’s CFO Stephen Pearce said the miner is looking to raise about $6 billion of new debt to fund its expansion plans at its Chichester and Solomon projects.

Shares of Conquest Mining have been placed in trading halt pending news of an expected capital raising of as much as $100 million to develop its Mt Carlton gold, silver and copper project in Queensland.

Karoon Gas Australia said on September 9, it had taken the first step towards listing its Brazilian and Peruvian acreage. The company said Tuesday it expects to launch an IPO of its South American assets by the end of this month.

Resource News

TNG said it discovered a new copper find at its Mount Peake project in Northern Territory, with the analysis showing values at 24% of copper.

Tap Oil said the Markisa-1 well in Block M, onshore Brunei Darussalam encountered good oil finds and a possible 29 meter oil column in the Ridan sand formation.

Gold explorer ERO Mining said it is changing its commodity focus through the acquisition of unlisted lithium and uranium explorer South East Energy.

Gainers & Losers

Nufarm Ltd led gainers in the ASX with a gain of 4.22% to A$3.95 followed by Crown Ltd 2.23% to A$8.72, Karoon Gas Australia Ltd1.54% to A$9.23, White Energy Co Ltd 1.21% to A$4.17 and Aquila Resources Ltd 1.16% to A$8.70.

Panoramic Resources Ltd led decliners in the index with a drop of 5.41% to A$2.80 followed by Cudeco Ltd 5.33% to A$2.31, Sundance Resources Ltd 5.26% to A$0.27, Macmahon Holdings Ltd 4.26% to A$0.675 and Isoft Group Ltd 4.17% to A$0.115.