Australian Stocks at 10-month and Dollar at 1-month Peaks

Marcus Jacob
04 Feb, 2011
New York City

Australian indexes closed at a 10-month high and the dollar advanced to a month peak on the rising commodities prices and the central bank estimate that the economy will recover from flood damages by the second half. QBE Insurance gained after it agreed to acquire Balboa Insurance for A$700 million.

[R]6:00 PM Sydney – Australian indexes closed at a 10-month high and the dollar advanced to a month peak on the rising commodities prices and the central bank estimate that the economy will recover from flood damages by the second half. QBE Insurance gained after it agreed to acquire Balboa Insurance for A$700 million.[/R]

Stocks in Sydney trading closed higher after the Reserve Bank of Australia said the economy is expected to recover from the flood damages by the second half. The central bank also said that coal production rebound will lead the recovery.

The ASX 200 index rose 42.10 or 0.9% to 4,862.70 and All Ordinaries Index increased 39.50 or 0.8% to 4,958.80. The two indexes are trading at 10-month high and the Australian dollar closed at its high in a month.

The Australian dollar increased 0.29 cents to close $1.0179.

Stock Movers

The most actively traded stock on the exchange, Telstra gained 7 cents to $2.86 with a trading volume of 108.73 million.

In trading, 723 stocks increased, 448 declined and 383 were unchanged. In all, 3.1 billion shares changed hands worth $6.13 billion.

BHP Billiton increased 35 cents to A$46.67 and Rio Tinto gained 20 cents to A$86.40. Newcrest Mining increased 89 cents or 2.4% to A$37.75 as gold traded higher by more than 1.5% in New York overnight trading.

Banks closed higher. Commonwealth Bank gained 47 cents to A$53.06 and Macquarie Group added 64 cents to A$41.78 and National Australia Bank added 21 cents to A$25.85.

QBE Insurance Group gained 7% to A$18.20 after the company agreed to acquire Balboa Insurance Company for $687 million or A$700 million from Bank of America. The annual profit margin for the business is expected to be in the range of 15% to 20%.

In addition, the insurer said that the second half net profit will be around $1.28 billion and profit margins are below the guidance range of 16% to 18%.

The company also said that claims for damages arising from floods in Queensland, New South Wales and Victoria and from Cyclone Yasi are within the company estimate for natural disasters.