Sydney Drops; NBN and Telstra in Focus

Chandrasekhar Atreya
24 Nov, 2010
New York City

Australian shares closed marginally lower, despite negative sentiments from U.S. and Korea. Lynas Corp and Sojitz Corp of Japan sign a 10-year deal for supply of 90,000 tons of rare earth to Japan. Melbourne residential prices lead Australian home prices for nine months in a row since March.

[R]6:00 PM Sydney, Australia – Australian shares closed marginally lower, despite negative sentiments from U.S. and Korea. Lynas Corp and Sojitz Corp of Japan sign a 10-year deal for supply of 90,000 tons of rare earth to Japan. Melbourne residential prices lead Australian home prices for nine months in a row since March.[/R]

Australian stocks in a volatile trade closed lower in the absence of local economic news. The U.S. Federal Reserve in the minutes of meeting suggested that labor markets are still weak and commercial and residential real estate markets are struggling.

The trading in Sydney recovered somewhat during the day to close marginally lower.

The ASX 200 Index lost 0.1% or 4.4 to close at 4,584.70.

The Australian dollar recovered most of its losses of the previous day as regional currencies recovered. The Aussie closed at 98 U.S cents in Sydney.

NBN Co, the company building the network in Australia, warned the federal government to reject demands from Telstra and Optus to alter the design of its national broadband network stating that to do so would jeopardize the crucial political commitment of a single uniform price for all customers.

This advice was contained in the business case put to the government two weeks ago some of which was outlined in a summary document released by the Prime Minister Julia Gillard Wednesday afternoon to gain support for a related law to split Telstra Corp’s business.

There is a need for splitting Telstra’s copper wire network from its main business to pave the way for a national plan to provide internet services to the remotest parts of the country, she said. This move clears the way for a vote on the Telstra law in the Senate today.

All offshore oilfields in Australia will be made liable for the costs of cleaning up spills as part of the federal government’s response to an inquiry made into the Montara spill in the Timor Sea last year.

Prices of houses in Melbourne remain least affordable in Australia, with the recent strength in Victorian dwelling prices keeping Sydney in the second place. The Housing Industry Association index released today shows that Melbourne prices surpassed Sydney prices since March are still ahead.

The RBA said it plans to sell its stake in troubled polymer banknote producer Securency.

Australia promised to provide a reliable long-term supply of the increasingly scarce rare earth minerals Japan needs for its economy. Foreign Minister Kevin Rudd said that Australia stands ready to be a long-term secure, reliable supplier of rare earths to the Japanese economy in the future.

Sydney-based Lynas Corp said it is in advanced stages of discussion to secure additional supply of rare earths for the Japanese market by accelerating expansion of the Lynas rare earth project at Mt Weld which is due to start production in 2011.

Lynas Corp and Sojitz Corp of Japan signed an agreement, which if successful will see the two companies allocate 8,000 tons to 9,000 tons of rare earths to the Japanese market over the next 10 years to be jointly marketed by the two and distributed by the latter.

Foreign Minister Seiji Maehara and Australian Trade Minister Craig Emerson agreed Tuesday, to resume their bilateral talks on free trade agreement sometime early next year during their talks in Canberra, according to a Japanese official.

Gunns Ltd said Wednesday that it will close several of its wood chipping sites in northern Tasmania as part of a major operational restructure of its forest products division.

Australia and New Zealand Banking Group sold nearly A$700 million of its loans to Centro Properties Group, dumping all its senior debt and some of its subordinated tranches.

Indian group Adani Mining’s proposed $10 billion coal project at Galilee Basin took a significant step towards development, with Queensland’s Coordinator General declaring the proposal one of significance for Australia and the state.

Stock Movers

Telstra Corp rose 1.46% to A$2.78 after the federal legislation paved the way for the telco to participate in the NBN after winning support of an independent senator Nick Xenophon.

Most mining companies lost in trade today after the Korean conflict dampened sentiment. BHP Billiton lost 19 cents to close at A$42.95, while Rio Tinto shed A$1.04 to close at A$82.49.

Fortescue Metals gained as little as 26 cents to close at A$39.67 as gold prices gained in the market.

Westpac after opening lower rallied to gain 9 cents to close at A$21.40. The other major banks were not able to rally enough to cover losses and closed lower.

Commonwealth Bank lost 3 cents to A$48.15 and ANZ lost 6 cents to close at A$22.28. National Bank of Australia in the meanwhile lost 11 cents to close at A$23.45.

Lynas Corp gained the most after signing the agreement with Sojitz of Japan for rare earth supplies. The stock gained 10.46% to close at $1.53.

Infigen Energy was the biggest loser dropping 6.98% to $0.60.