Australian Index Drops 1.4%; Woodside, Newcrest Lower Output Views

Marcus Jacob
19 Apr, 2011
New York City

Australian stocks faced a selling pressure on the international worries and the release of minutes of the latest RBA meeting. Woodside quarterly revenues declined 3% on production fall of 19% and indicated a delay in the start of Pluto oil field. Newcrest lowered its gold production outlook.

[R]5:00 PM Sydney – Australian stocks faced a selling pressure on the international worries and the release of minutes of the latest RBA meeting. Woodside quarterly revenues declined 3% on production fall of 19% and indicated a delay in the start of Pluto oil field. Newcrest lowered its gold production outlook.[/R]

Stocks in Sydney trading declined after the Reserve Bank of Australia released April minutes of meeting. The stocks were already on the defensive after indexes in overnight trading declined in the U.S.

U.S. indexes at one point dropped as much as 1.6% before recovering to close down 1.1% after S&P lowered the credit outlook on the U.S. government debt and indicated that there is one-in-three chance that the rating will be lowered in the next two years.

Standard & Poor’s and other rating agencies have been slow in adjusting their outlook for the U.S. debt and are widely perceived in the analyst community to have lost their credibility in providing unbiased ratings on the U.S. debt.

The U.S government debt has ballooned in the last ten years on three wars and bailout of banks and low taxes on highest income earners and top three rating agency has never questioned the sudden rise in debt levels.

The rating agency in the past have kept their highest rating on mortgage securities that turned out to be worthless after the U.S. housing market collapsed in 2008.

The ASX 200 index declined 68.60 or 1.4% to 4,793.30 and the All Ordinaries index dropped 1.44% or 71.10 to 4,874.30.

The Australian dollar edged lower to US$1.048 and crude oil declined 92 cents to US$106.77 a barrel.

The latest minutes of meeting from the RBA suggested that the central bank is comfortable with the current interest rate regime that will contain inflation in the medium term. The central bank cited patchy economic recovery and did not see any reason to raise rates at this time.

Stock Movers

BHP Billiton declined 82 cents to $46.67 and Rio Tinto fell $1.90 to $82.10.

Woodside Petroleum decreased 72 cents to $46.05 after the energy explorer said that recent weather-related delayed cuts its production by 12% in the quarter to March.

The energy explorer said first quarter revenues declined 3% to $998 million from $1.03 billion and production declined 19% to 15.6 million barrels of oil equivalent from 19.2 million BOE a year ago.

Woodside maintained the full year production outlook between 63 million BOE and 66 million BOE and the commissioning of the Pluto project will add between 5 million and 9 million BOE.

Newcrest Mining declined 32 cents to $40.80 after the gold miner lowered its full-year production outlook on rising violence in Ivory Coast and inclement weather on the east coast in Australia. The gold and copper miner estimated 4.4% decline in annual production in the year.

The miner said gold production in the first three months to March declined 16% to 604,791 ounces and copper production increased 13% to 20,098 tons. Cash cost for the gold production increased to $497 an ounce from $440 an ounce in the previous quarter.

The Trust Company gained 10 cents to $6.50 after annual income increased 3% and warned that current fiscal year earnings may suffer on the lack of recurring revenues.

Banks closed lower. National Australia Bank declined 29 cents to $26 and Commonwealth Bank dropped 52 cents to $52.01 and Westpac fell 37 cents to $24.58.