Australian Inflation Up 2.7%, Stocks Gain

Chandrasekhar Atreya
25 Jan, 2011
New York City

Stocks in Sydney gained for the second day after latest read on the core inflation was lower-than-expected. Oil Search and Newcrest Mining revise production guidance down citing temporary closing of plants and flooding of mines as the main causes.

[R]6:00 PM Sydney, Australia – Stocks in Sydney gained for the second day after latest read on the core inflation was lower-than-expected. Oil Search and Newcrest Mining revise production guidance down citing temporary closing of plants and flooding of mines as the main causes.[/R]

Stocks in Sydney traded higher for the second day in a row after the latest inflation data came in lower than expected.

The ASX 200 Index in Sydney added 0.46% or 21.80 to close at 4,807.80 and the Australian dollar closed at 99.69 U.S cents in Sydney today.

The consumer price index rose only 0.4% in the fourth quarter of 2010 from the third quarter and rose 2.7% from a year earlier, the Australian Bureau of Statistics said today.

Core inflation rose by 2.3%, its slowest pace since 2000.

Oil Search reported better-than-forecast production for 2010 but said it expects this year’s output to be lower as plants are temporarily shut down to allow for work on the $15 billion liquefied natural gas project in Papua New Guinea.

Virgin Blue said today it expects to post a 50% lower net profit for the first half ending December 31, due to floods, a slowdown in consumer spending and disruptions to its check-in system last September.

The company expects net profit after tax of A$23 million to A$26 million, down from A$62.5 million in the corresponding period of the prior year. Underlying net profit before tax is expected to be between A$70 million and A$75 million for the first half of 2010/11, down from A$75.6 million a year earlier.

Newcrest Mining also revised production guidance for the full year downwards for gold and copper after floods affected Cadia Valley operations after a challenging quarter led to drop in production.

The miner cut its gold output guidance for the full year ending June from a range of 2.85 million ounces and 3 million ounces to 2.85 million ounces and 2.95 million ounces, due to cut in production at its Cadia Valley, Cracow and Mt Rowdon mines in Australia. It lowered the guidance for copper more dramatically by 6.6% from a range of 80,000-86,000 tons to 75,000-80,000 tons.

The housing market in Australia is expected to deteriorate over the next 12 months, with interest rates rising and limited access to credit damping prices, a National Australia Bank survey shows.

“Conditions in the Australian residential property sector over the next 12 months are expected to weaken considerably. Tight credit conditions and rising interest rates are the main impediments to new residential developments and existing property sales. House prices are expected to fall by 0.5% in the next year with Brisbane leading the drop with 1.7%, NAB said in its report.

Stock Movers

Oil Search dipped 2 cents to close at A$6.75 after saying its current year output is likely to be lower.

Newcrest Mining, the gold miner, gained 59 cents to A$37.62 after reporting better-than-expected output for the December quarter.

Virgin Blue, the airline company, lost one cent to 41.5 cents after flagging a plunge of 50% in net profits in the first half due to floods and other causes.

Sundance Resources was the largest gainer in the index gaining 7.6% to A$0.495.

National Australia Bank gained 17 cents to A$24.78, Westpac Banking Corp rose by two cents to A$22.82 and ANZ dropped by five cents to close at A$23.61.

Commonwealth Bank gained 28 cents to A$52.60 after announcing it had A$199 billion in funds under administration at December 31, for a 2% rise in the quarter.