Sydney Stocks Drop on Softer Inflation

Chandrasekhar Atreya
27 Oct, 2010
New York City

Shares in Sydney lost ground after softer than expected inflation data changed investor sentiment. Consumer price index rose 0.7% in the third quarter and core price inflation rose 0.6% only. Australia turned net importer of food and groceries.

[R]6:00 PM Sydney, Australia – Shares in Sydney lost ground after softer than expected inflation data changed investor sentiment. Consumer price index rose 0.7% in the third quarter and core price inflation rose 0.6% only. Australia turned net importer of food and groceries.[/R]

Shares in Sydney traded down after lower–than-expected inflation spurred a rapid change in investor sentiment near the close.

The ASX 200 Index lost 0.85%or 39.70 to close at 4,648.10.

The consumer price index in Australia rose 0.7% in the third quarter ended September 30 from the previous quarter and rose 2.8% from a year earlier, the Australian Bureau of Statistics said Wednesday.

Core inflation, closely watched by policy makers rose 0.6% in the third quarter, compared to a rise of 0.7% in the second quarter of the year.

Federal Treasurer Wayne Swan said the latest consumer price index figures show that inflation is moderating. “Today’s inflation figures show that both CPI inflation and the underlying core inflation have continued to moderate,” Swan told reporters in Canberra on Wednesday.

A Senate inquiry on competition in the banking sector gathered pace and looked almost certain after an independent senator Nick Xenophon joined forces with the coalition.

The inquiry would look into the level of competition between banks and non-bank providers and among other things also test the claims of the leading banks about rising cost of capital.

The Australian Food and Grocery Council said in its annual report that the country is now a net importer of food and grocery products. The position dropped dramatically from a $4.5 billion surplus in 2004/05 to a $1.8 billion deficit in 2009/10.

The Council’s Chief Kate Carnell said that the industry was cause for some concern and needs the government’s attention.

Stockland said it will sell 13% stake in rival GPT Group marking the end of the property group’s ambitions to acquire its rival.

Stockland, which this month successfully acquired retirement village operator Aevum, had acquired the stocks of GPT Group in November of 2008 at an average price of $3.6. The group sold 243 million shares through a book build process at a price of $2.75 per share incurred a loss of $208 million.

Australian senate Tuesday asked the government to produce a raft of documents relating to the proposed mining tax by Thursday. If the papers are not released the upper house wants the new commonwealth commissioner to decide if they should be made public.

Opposition deputy treasury spokesman Mathias Cormann successfully moved three motions on Tuesday demanding the labor government produce the assumptions underlying its proposed super profits tax and the revamped mineral resource rent tax.

Adelaide-based Syngas said Wednesday it had signed an agreement with China National Electric Equipment Corp to work together on the Clinton project, located about 120 kilometers northwest of Adelaide.

Anglo Swiss miner, Xstrata Resources said it would revise its $428 million acquisition offer for Sphere Minerals after shareholders began pulling back their acceptances.

The company said the revised offer is free of all conditions if its stake exceeds 50% prior to the close of the offer period of November 12 and said if not, it would allow its offer to lapse.

The full year net profit of National Australia Bank soared 63%, aided by a decline in charges for problem loans after the economy gathered pace.

NAB said its net profit for the full year ended September 30 rose to A$4.22 billion from A$2.59 billion a year earlier, and new charges for problem loans fell to A$2.26 billion after taking charges of A$3.82 billion last year.

Origin Energy reported Wednesday that there was a 45% rise in its quarterly energy output mostly on acquisitions and as new projects came on line.

Karoon Gas Australia Ltd said it expects to raise as much as $773 million in an initial public offering of its South American unit in Brazil to fund exploration.

The company said it plans to sell 1.03 million shares of its South American business and to use the proceeds to drill in five Peruvian and seven Brazilian prospects.

Resource News

YTC Resources said Tuesday it will place 40 million shares at 25 cents each to raise $10 million to proceed with its expanded DFS program.

Exco Resources reported that it joint venture production at the White Dam project in South Australia was 17,524 ounces of gold in the September quarter, ahead of market expectations.

Crescent Gold reported encouraging results at its Apollo gold project in Western Australia at the very first RC drilling.

Shree Minerals delineated new iron ore resources at its Nelson Bay project in Tasmania.

Gateway Mining said Tuesday it will start drilling at a number of targets in its Gidgee Project in Western Australia by the end of October.

Gainers & Losers

Resmed Inc led gainers in the ASX with a rally of 4.43% to A$3.3 followed by Infigen Energy 3.5% to A$0.74, Aristocrat Leisure Ltd 2.3% to A$3.56, Billabong International Ltd 2.17% to A$7.99 and Perseus Mining Ltd 2.09% to A$2.93.

Lynas Corp led decliners in the index with a drop of 6.73% to A$1.455 followed by Toll Holdings Ltd 6.63% to A$6.20, Sandfire Resources NL 6.21% to A$7.55, Karoon Gas Australia Ltd 6.04% to A$9.49 and Iluka Resources Ltd 5.97% to A$6.77.