Australian Index Drops 1.4%; Job Cuts Surprise Economists

Marcus Jacob
10 Mar, 2011
New York City

Australian indexes declined as markets in Asia fell and resource prices edged lower. Australian economy lost 10,100 jobs in February and inflation expectation declined according to a private survey. Rio Tinto lifts its conditional offer for Riversdale to $16.50 a share.

[R]4:30 PM Sydney – Australian indexes declined as markets in Asia fell and resource prices edged lower. Australian economy lost 10,100 jobs in February and inflation expectation declined according to a private survey. Rio Tinto lifts its conditional offer for Riversdale to $16.50 a share.[/R]

Australian indexes declined after employment declined in February, prices of metals and fuel declined in international markets and indexes in Asia fell.

The ASX 200 index declined 68.1 or 1.43% to 4,699.70 and All Ordinaries index fell 71.90 or 1.5% to 4,791.30.

The Australian dollar declined to close at US$1.003 and crude oil edged fell 67 cents to US$104.37.

Australian economy lost 10,100 jobs in February, the decline in a year and half. Full-time jobs increased 47,600 in the month but part-time jobs declined 57,700 in the month.

Economists were anticipating an increase of 20,000 in new jobs as employment conditions are favorable and employers added 300,000 jobs in the last fifteen months.

The Australian dollar edged lower after the release of the employment data from the Australian Bureau of Statistics but regained most of the losses by the end of trading.

In a separate private survey conducted by Institute of Applied Economic and Social Research under the Melbourne University said inflation expectations for the next 12 months declined to 3.6% from 4.3% in February.

In a speech in London, UK, the Reserve Bank of Australia Governor Glenn Stevens that central bank has a higher leverage as household savings rate has increased and strong Australian currency.

Rio Tinto lifted its bid for Mozambique based Riversdale Mining to $16.50 from $16 a share only if majority of shareholders tendered their shares.

Riversdale Mining managing director Steve Mallyon told Australian Online that with the help of Rio Tinto the company can improve project completion time.

Brazil based CSN and India based Tata Steel control 47% together and have been raising their stakes in Riversdale and have not indicated that they are in support of the deal.

Stock Movers

Resource sector stocks closed lower on a decline in copper prices and weak sentiment in international trading. BHP Billiton declined $1.37 to $44.63 and Rio Tinto fell $1.96 to $80.42.

Fortescue Metals dropped 35 cents to $6.04 and Riversdale Mining added 48 cents to $15.61.

Gold miners closed lower but gold closed up 0.4% to US$1,430. Newcrest Mining decreased 60 cents to $37.70.

Banks closed lower in a market sell off. Commonwealth Bank fell 20 cents to $51.30 and National Australia Bank declined 17 cents to $24.91 and ANZ decreased 17 cents to $23.60. Westpac fell 18 cents to $23.19.

Gunns closed up 6% to 63 cents after the company received federal government approval for its pulp mill in Tasmania. The long delayed project has been snared in heightened environmental scrutiny.