Australian Dollar and Stocks Drop; Imports Up 5%

Chandrasekhar Atreya
20 Oct, 2010
New York City

Australian shares fell after China increased interest rates and the Australian dollar edged lower. Vacancies for skilled jobs fall 10% in October. September merchandise imports into Australia rises 5%.

[R]6:00 PM Sydney, Australia – Australian shares fell after China increased interest rates and the Australian dollar edged lower. Vacancies for skilled jobs fall 10% in October. September merchandise imports into Australia rises 5%.[/R]

Australian shares dropped and hit a two-week low on Wednesday after China’s central bank lifted interest rates in a surprise move overnight. Investors were also unnerved by the rising prospects that the U.S. banks may be forced to buy depressed mortgage securities from bond investors.

The benchmark ASX 200 index fell 0.66% or 30.8 points to close at 4,624.9 after dropping as low as 4,583.0. The Australian dollar declined as the U.S. dollar rose against most currencies. The Aussie dollar closed at 97.20 U.S. cents after dipping as low as 96.45 U.S. cents.

Merchandise imports rose by A$350 million in September to A$17.384 billion, seasonally adjusted, according to the Australian Bureau of Statistics figures released Wednesday.

When unadjusted, these imports increased 5% to A$18.332 billion, from a downwardly revised A$17.409 billion in August, the ABS said. Imports of mineral fuels and lubricants other items rose to A$2.455 billion in September, from A$2.195 billion in August, while imports of machinery and transport equipment rose to A$7.060 billion from A$6.971 billion.

The Department of Education, Employment and Workspace Relations skilled vacancies index in October was 45.1points, 10.3% higher than in October 2009. The department’s Internet vacancy index rose 5.9% for September to 93.8 points to be 19.4% higher than in September 2009. Vacancies fell in all three occupational groups tracked by the department.

The annualized growth rate of the Westpac-Melbourne Institute leading index was 5.3% in August, well above its long-term trend of 3.1%. Still, the index, which indicates the likely pace of economic activity up to nine months into the future, has now dropped for five months in a row from a peak of 10.5%.

Investors overwhelmingly backed Tabcorp’s $430 million capital raising and the stock is expected start trading after the halt expires on Thursday.

Lower and subdued consumer sentiment and price deflation in food, toys and consumer electronics took its toll on Woolworths, which reported lower than expected sales for the quarter ended September.

Shares of gold miners Kingsgate Consolidated and Dominion Mining were placed on trading halts ahead of a takeover announcement.

The Future Fund sold 113.6 million shares in Telstra reducing its shareholding in the telecom company to 10%. Telstra in the meantime started the sale of 500 million euro in fixed-rate bonds in the European medium-term market.

Origin Energy, the leading coal seam gas explorer controlled wells have found traces of cancer causing chemicals. The detection of the harmful chemicals has worried regulators and local population.

Resource News

Tox Free Solution said it secured a $3 million a year contract with Apache Energy and the company said future larger contracts may follow the sale.

Macquarie Harbour Mining signed a deal with an American aluminum company and announced plans to raise $12 million for its expansion in the U.S.

Rio Tinto formally approved the first phase of a $10 billion plus Pilbara iron ore expansion after it approved $3.1 billion capital spending pla, two days after scrapping a deal with BHP Billiton.

Apache and its partner Inpex have halted production at their new Van Gogh oil project off Western Australia, with an inevitable knock-on impact on deliveries to customers in Asia.

Gainers & Losers

Ten Network Holdings Ltd led gainers in the ASX with a gain of 9.57% to A$1.545 followed by SP Ausnet 3.26% to A$0.95, Platinum Australia Ltd 3.2% to A$0.645, AGL Energy Ltd 2.53% to A$16.61 and Infigen Energy 2.46% to A$0.625.

Bow Energy Ltd led decliners in the index with a drop of 5.69% to A$1.16 followed by Elders Ltd 4.58% to A$0.625, Kagara Ltd 4.55% to A$0.735, Tower Australia Group Ltd 4.45% to A$2.36 and Challenger Financial Services Group Ltd 4.17% to A$4.60.