Resource Rally Lifts Australian Stocks; Caltex Drops 5%

Marcus Jacob
24 Mar, 2011
New York City

Australian stocks rebounded 1% after investors focused on the metal demand as Japan looks reconstruct. Caltex dropped 5% after it reported sharply lower refining margins from a year ago. Australian government agreed with most of the recommendations of an independent group on new mining tax.

[R]5:00 PM Sydney – Australian stocks rebounded 1% after investors focused on the metal demand as Japan looks reconstruct the earthquake stricken area. Caltex dropped 5% after it reported sharply lower refining margins from a year ago. Australian government agreed with most of the recommendations of an independent group on new mining tax.[/R]

Stocks in Sydney trading gained on the prospect of higher metals demand as Japan focuses on reconstruction and the optimism that the U.S. economic recovery will continue.

Portugal government may be forced to seek a bailout from the European Union after the government collapsed as it failed to pass austerity measures and cut budget deficits.

The ASX index increased 47.2 or 1% to 4,699.60 and the All Ordinaries index rose 47.7 or 1% to 4,794.20.

The Australian dollar closed up to US$1.014 and crude oil futures increased 65 cents to US$105.16.

The Australian government agreed with several recommendations of the independent group set to harmonize taxes on the mining industry.

The government said it agreed with 98 recommendations by the Minerals Resources Rent Tax policy transition group.

However the recommendations were slammed by chief executive of Fortescue Metals Andrew Forrest. “Who else is going to pay it? It will be the new companies, the new developers who are the future of the economy that you want to encourage.”

The larger companies with established mining operations are likely to be shielded from the added new taxes that will be adjusted in the corporate tax calculation.

The government today agreed with the recommendations by the policy group that all current and future state royalty payments by iron ore and coal mining companies should be credited against federal taxes as opposed to previous proposal that included only current state royalty.

Stock Movers

Resource stocks closed higher after a rally in stocks in New York and gains in energy and metals prices in overnight trading in London.

BHP Billiton increased 1.2% to $44.71 and Rio Tinto added 1.1% to $81.60. Newcrest Mining increased 2.6% to $38.05 and Atlas Iron soared 8.4% to $3.47.

Banks closed higher and participated in the rally that lifted stocks in most sectors. Westpac increased 1.7% to $23.42 and QBE added 1.2% to $17.09.

Energy explorers were higher after tracking gains in crude oil prices by 1% but airlines were lower and oil refiners struggled.

Qantas increased 1.9% to $2.13 and the largest domestic carrier raised air fares for the second time this year and blamed the higher fuel costs. The airline has not cuts salaries of executives or trimmed high perks of staff.

Caltex dropped 5.3% or 85 cents to $15.31 after the oil refiner reported lower than expected margins per barrel.

The company said its difference between petrol price in the wholesale market and crude price in February declined to US$6.44 a barrel on the sale of 755 million liters of different fuel grades from US$9.15 a barrel and 830 million liters in the month a year ago.

Caltex share has rebounded 77% from July of last year when margins were rising the Australian dollar was steady.

Graincorp Ltd increased 4 cents to $7.36 after the competition authority did not alter the current arrangement to export wheat from ports operated by the company.

Consolidated Media dropped 1.7% to $2.75 on comments of its one of the largest shareholders Kerry Stokes that indicated he may not be prepared to offer a price for the rest of the 75% holding in the company that he does not own.

Primary Health Care Limited declined 5 cents to $2.90 after it lowered its guidance.

Woolworths declined 0.2% to $25.74 and Telstra dropped 0.4% to $2.66.