Sydney Stocks Rise on Stronger Commodities Prices

Chandrasekhar Atreya
21 Dec, 2010
New York City

Australian stocks traded higher led by surging mining stocks after commodity prices reached a 27-month high. Policy Transition Group releases a list of recommendations on MRRT. Ramsay Healthcare revised higher full-year profit outlook.

[R]6:00 PM Sydney, Australia – Australian stocks traded higher led by surging mining stocks after commodity prices reached a 27-month high. Policy Transition Group releases a list of recommendations on MRRT. Ramsay Healthcare revised higher full-year profit outlook.[/R]

The benchmark index in Sydney closed higher after commodities prices rose in overnight trading in New York and Europe to a 27-month high.

The benchmark ASX 200 Index was up 35.3 points, or 0.75% to close at 4,771.90 and the Australian dollar closed at 99.61 U.S cents in Sydney today.

One of the recommendations proposed by the Policy Transition Group of the federal government that all current and future state and territory royalties should be credited against its proposed mineral resource rent tax, in direct contrast to the government’s stance to limit credits only to royalties existing as on May 2.

The group also recommended the threshold for the tax should be A$50 million in profits as one of its 94 recommendations.

Despite the heavy rains and crop damages of A$600 million, farmers of South Australia remain on track to produce a record harvest this year.

An official assessment by the Department of Primary Industries and Resources SA said on Monday that the state would reap a record 9.6 million ton of crops this harvest.

Ramsay Healthcare, Australia’s largest private hospital, reported a stronger than expected first half from its local operations plus the benefits of expansions to several existing facilities and upgraded its full-year profit growth guidance.

The company lifted net profit growth forecast for the year to June 30, 2011 to range 22% to 24% compared to earlier guidance of 13% to 15%.

The RBA released the minutes of its latest meeting in December in Sydney today which shows that the central bank decided to leave rates unchanged at 4.75% because rates had been revised upwards in November and the Australian dollar remained high, creating a mildly restrictive policy stance.

“Given the very high level of terms of trade and the positive outlook for business investment, this policy setting was regarded as appropriate,” the RBA said.

Lend Lease Group, the Australian developer, confirmed that it has agreed to buy Bilfinger Berger SE’s Australian division Valemus Ltd for A$1.06 billion with a mix of cash and debt.

The sale is expected to be completed in the first quarter of 2011, after obtaining approval from the Australian anti-trust authorities, according to regulatory filing by Bilfinger Berger SE.

Riversdale Mining, the coal miner was halted ahead of an expected announcement of its takeover.

Freight costs of bulk commodities reduced to their lowest levels in over a year due to a rise in supply of new ships, despite the strength in resource prices.

Royal Dutch Shell and PetroChina have called a consortium of four companies to bid for taking up the proposed LPG project in Queensland. The bid is for carrying out initial engineering and design work on the plant.

Perth-based Atlas Iron Ltd agreed to buy Giralia Resources NL for A$828 million offering 1.5 of its shares for each of Giralia’s, or 1.33 Atlas shares and A$0.50 a share, the two companies said in their joint statement to the Australian Stock Exchange.

The deal is expected to almost triple the steelmaking resources of Atlas Iron Ltd.

Stock Movers

BHP Billiton closed up 60 cents or 1.34% to A$45.42 while Rio Tinto gained 1.46% or A$1.25 to close at A$86.70.

Riversdale Mining was halted and last traded at A$16.30.

Giralia Resources shares surged as much as 39.8% to A$4.18 after it recommended an A$828 million takeover offer from Atlas Iron Ltd.

Atlas Iron eased 4 cents to close at A$2.92.

Lend Lease shares added 49 cents to A$8.75 after it announced plans to takeover Valemus Australia for A$1.06 billion.

ANZ closed up 42 cents to A$23.70 and Commonwealth Bank rose 27 cents to A$51.00. National Australia Bank added 28 cents to A$24.21 and Westpac gained 5 cents to A$22.71.