Australian Index Gains 1.4%; BHP Resumes Gulf of Mexico Drilling

Marcus Jacob
30 Mar, 2011
New York City

The Australian benchmark index increased 1.4% on the back of a rise in commodities prices. BHP Billiton resumed drilling operations in the Gulf of Mexico and Rio Tinto struggles with Riversdale acquisition.

[R]5:00 PM Sydney – The Australian benchmark index increased 1.4% on the back of a rise in commodities prices. BHP Billiton resumed drilling operations in the Gulf of Mexico and Rio Tinto struggles with Riversdale acquisition.[/R]

The Australian stocks firmed after metals and commodities rallied and markets in New York closed higher and in Japan rebounded. In the last one year of trading the Australian benchmark index has been flat.

The ASX 200 index increased 66.4 or 1.4% to 4,822.20 and the All Ordinaries index added 61.50 or 1.3% to 4,912.70.

The Australian dollar edged higher to close at US$1.031 and crude oil declined 15 cents to $104.64.

BHP Billiton confirmed that it has begun drilling in the Gulf of Mexico and after it received a permit to drill from March 28. BHP, the third largest producer in the region and five other explorers were given permits after a six month ban on drilling.

Separately, BHP also confirmed a US regulatory approval to purchase Fayetteville Shale natural gas field from Chesapeake Energy for $4.6 billion.

The Fayetteville purchase will help BHP in diversifying its asset base in Australia that relies on China market for 60% of its sales.

Stock Movers

BHP Billiton increased 91 cents to $45.61 and Rio Tinto added $2 to close at $84.28. Rio failed to win the majority stake for Riversdale Mining and is in negotiation with one of the large shareholders believed to be Brazil based CSN.

Gold miners were in favor after a slight gain in gold prices. Newcrest Mining increased $1.41 to $39.93 and Gold One International added 4 cents to 42 cents.

Sandfire Resources NL increased 6 cents to $7 after the gold and copper miner said it is near completion to raise $400 million of debt to support its DeGrussa mining project in Western Australia in the next quarter.

Qantas increased 4 cents to $2.19 and said it will reduce capacity on domestic and international routes and cut management positions. However, the company failed to cut executive bonuses and corporate waste.

Banks closed higher. Westpac increased 18 cents to $24.27 and Commonwealth Bank increased 69 cents to $52.53 and ANZ added 37 cents to close at $23.88. National Australia Bank increased 28 cents to $25.63.

Myer Holdings Ltd increased 3 cents to close at $3.19 and the company reopened its Melbourne store.