Sydney Closes Lower; RBA Expects Resource Boom to Last

Chandrasekhar Atreya
19 Nov, 2010
New York City

Australian shares closed marginally lower and fell 1.4% for the week. BHP decides to open its rail line in Pilbara region to smaller mining companies. Fortescue plans to double its iron ore capacity in its Pilbara hubs.

[R]6:00 PM Sydney, Australia – Australian shares closed marginally lower and fell 1.4% for the week. BHP decides to open its rail line in Pilbara region to smaller mining companies. Fortescue plans to double its iron ore capacity in its Pilbara hubs.[/R]

Australian stock market edged higher boosted by firmer commodity prices and a rally on Wall Street. Near the close, indexes wavered and closed down for the day.

The ASX 200 Index lost 0.24% or 11 points to close at 4,629.20. For the week, the index lost 1.35%.

The Australian dollar fell in trading amid concerns that exports to China may decline following rising inflation.

The Aussie dollar closed at 98.50 U.S. cents in Sydney dropping from a high of 98.99 U.S cents in New York on Thursday.

Future Fund, Telstra’s single biggest shareholder, voted against all resolutions put out to vote in the telecom company’s annual general meeting today, as confirmed by Telstra’s Chairman Catherine Livingstone.

On Wednesday, the stock had closed at $2.56, the lowest ever since the company’s float in 1997.

BHP Billiton opened the doors of its Pilbara haulage railway lines to smaller producers by starting landmark discussions that will allow Atlas Iron to use the facility from Port Hedland.

This move could help smaller producers like Atlas to take their outputs to the lucrative export market. Shares of Atlas closed up to A$2.87 and BHP to A$43.80.

New South Wales-based First State Super and Victoria-based Health Super announced plans to join forces and form fifth largest asset based superannuation fund in Australia. The two non-profit funds will create a $28 million pool of superannuation assets according to research firm SuperRatings.

This is part of a drive to consolidate as superannuation funds seek to compete on costs and thus reduce pressures from federal government reforms.

The Reserve Bank of Australia said it expects the resources boom to last another two decades as projects in this sector with firm commitments soars to as much as $133 billion on the rising demand in Asia, especially from China and India.

RBA Deputy Governor Ric Battellino said while addressing a business lunch in Perth on Thursday, the strength of Asia represented a very favorable environment for the Australian economy.

Fortescue Metals Group, the third largest iron ore mining company in Australia, approved plans to triple iron ore output in Pilbara region by spending $8.4 billion.

The company plans to use the funds to expand its Chichester and Solomon hubs including a $4.6 billion expansion of rail and port infrastructure that will help it to increase output from the current 55 million tons to 155 million tons.

Stock Movers

Telstra stocks after trading at its lowest level of $2.36 since its float in 1997 gained 2.34% to close at $2.62, after its largest shareholder Future Fund sold its stake in several tranches.

BHP Billiton’s stocks gained after the company decided to hold talks to open its rail line in Pilbara to smaller exporters. The stock gained and closed at $43.80. Atlas Iron, one of the smaller exporters in talks with BHP, lost 2.79% to close at $2.79.

Macarthur Coal gained 2.68% to $12.24 and Murchison Metals gained 4.72% to $1.22. InvoCare was the biggest gainer in the index with a gain of 5.49% to close at $7.29.

St Barbara had the steepest drop of 4.31% to $0.445 in the ASX 200 index.

Qantas Airways fell 2.57% to $2.66.

Rio Tinto lost 0.11% to close at $84.30.