Sydney Stocks Rise in Asia Rally; Home Sales Up in October

Chandrasekhar Atreya
29 Nov, 2010
New York City

Stocks in Australia closed higher as commodities advanced. Australia passes legislation that will separate the retail and wholesale businesses of Telstra. AMP approves acquisition of AXA Asia Pacific. Corporate profits in Australia declined in the September quarter and homes sales in October.

[R]6:00 PM Sydney, Australia – Stocks in Australia closed higher as commodities advanced. Australia passes legislation that will separate the retail and wholesale businesses of Telstra. AMP board approves acquisition of AXA Asia Pacific Holdings. Profits at companies in Australia declined in the September quarter and homes sales rise in October.[/R]

Australian stocks traded on international events and closed up. The modest recovery was fueled after the European Union and Ireland agreed on final terms of the loan package of as much as 85 billion euros but on steep interest rate of 6.7%.

The ASX 200 Index in Sydney added 0.44% or 20.20 points to close at 4,618.50.

The Australian dollar traded lower as the dollar continued to advance. European nations struggle to contain widening debt contagion and after Slovak finance minster questioned the future of the euro.

The Aussie dollar closed almost unchanged at 96.45 U.S cents in Sydney today.

The federal parliament of Australia passed the legislation to structurally separate the wholesale and retail arms of Telstra with the lower house approving the senate amendments in a vote this afternoon.

Company profits declined in the September quarter and the first quarterly decline in the year, after rising by the most in a decade in the previous quarter. The profits fell 1.5% from the previous quarter, according to data released today by the Australian Statistics Bureau.

The CEO Institute of Business Confidence Index released in Sydney today showed that the economic outlook sentiment was the strongest in Western Australia at 58, followed by Victoria at 47, Queensland at 45 and New South Wales at 43.

However, the business confidence in South Australia lagged the national average recording only 22.

“The mood of the CEO’s is of cautious optimism, but there’s evidence that some businesses are experiencing margin pressure, with a number of them expecting an increase in turnover but not in profit,” The CEO of the institute Evan Davies said.

Separately the figures released today by the HIA Jeld Wen home sales report showed that home sales rose 2.4% in October from a month earlier. The data showed that new home sales improved led as the sale of detached homes increased.

The report also showed that sales of multi-units fell by 2.6% I October.

Rio Tinto said today it expects its copper production to drop by 15% next year due to lower grades at its operations and a lack of growth in other projects until the Oyu Tolgoi project in Mongolia begins production in late 2012.

The company expects production of copper this year to be about 661,000 tons and the output next year to be about 100,000 tons less. The total output next year will represent a drop of 18% from the production of 805,000 tons last year.

Rio Tinto also said today that it is pricing more of its alumina on a short-term basis in a move that could prove to be unpopular with the buyers of this raw material for Aluminum.

Coal of Africa confirmed today it will acquire the Chapudi coal project in the Limpopo province of South Africa from Rio Tinto and its partner Kwezi Mining. The assets at the mine consist of thermal and coking coal projects and provide an additional 1,040 tons of the resource, contiguous with the Makhado project.

AMP signed today documents with AXA Asia Pacific Holdings and its parent AXA SA to start the takeover proceedings of the wealth manager. Under the proposal announced on November 15, AMP would buy 100% of AXA Asia Pacific Holdings.

“The independent directors continue to unanimously recommend the proposal, in the absence of any other superior one and subject to the opinion of an independent expert,” said Rick Albert, Chairman of AXA Asia Pacific Holdings.

Primer Minster Julia Gillard said on Sunday that Australia must legislate by next year and put a price on carbon emissions thus pressing for a deadline to combat climate changes.

As the world climate talks got under way in Mexico, Gillard said her government would bring forward by a year a decision on how to price carbon without clarifying whether a previous deadline of 2013 for actual implementation would be met.

Stock Movers

Healthcare and energy stocks led the gainers and most banks closed higher.

In healthcare, Cochlear Inc gained 2.79% to close at A$80.95 while Sonic Healthcare gained 1.28% to A$11.88.

Energy stocks were boosted by higher oil prices.

Woodside Petroleum gained 76 cents to A$41.71 and Oil Search gained 3 cents to close at A$6.73.

Nufarm Ltd rallied 4.95% to close at A$4.45 after a broker lifted the stock rating.

GUD Holdings led the decliners in the index with a drop of 4.57% to A$9.20.

Commonwealth Bank gained 2.08% to A$48.57. National Australia Bank added 30 cents to close at A$23.53.

Rio Tinto lost 20 cents to close at A$83.84 while BHP Billiton gained 4 cents to close at A$43.24.