Weakness in Miners Drag Australian Stocks

Marcus Jacob
20 May, 2011
New York City

Australian stocks turned lower on weak regional trading. Commodities rebounded but miners declined after Western Australia lifted royalty payment on certain grades of iron ore. Fortescue Metals estimated iron ore reserves of 716 million tons at its project in Western Australia. Banks closed lower.

[R]4:30 PM Sydney – Australian stocks turned lower on weak regional trading. Commodities rebounded but miners declined after Western Australia lifted royalty payment on certain grades of iron ore. Fortescue Metals estimated iron ore reserves of 716 million tons at its project in Western Australia. Banks closed lower.[/R]

The ASX 200 index declined 0.5% or 24.2 to 4,732.20 and All Ordinaries index fell 0.4% or 20.50 to 4,807.20.

The Australian dollar increased 0.05 cents to US$1.069 and the price of crude oil increased US$1.02 to US$99.95.

Stock Movers

Miners declined after Western Australia increased royalty tax on certain grades of iron ore to 6.5 cents.

BHP Billiton declined 77 cents to $44.05, Rio Tinto fell 90 cents to $80.20 and Newcrest Mining declined 30 cents to $38.47. Kingsgate Consolidated declined 7 cents to $7.73.

Fortescue Metals declined 5 cents to $6.44 after the company estimated iron ore reserves of 716 million tons for the first stage of its Solomon Hub project in Western Australia.

Three of the four largest banks in Australia declined.

Westpac declined 15 cents to $22.75, Commonwealth Bank declined 21 cents to $52.17 and ANZ fell 19 cents to $22.79. National Australia Bank inched up 1 cent to $27.41.

Mayborough Sugar Factory declined 4 cents to $4.02 after it lowered its annual earnings outlook and said volume of sugar crushing will be lower in the year on bad weather.

Telstra eased 1 cent to $3.04 ahead of its dividend payment date of 14 cents.

Fairfax Media closed down 2 cents to $1.09 and Macquarie Radio Network said it may be interested in acquiring its radio assets.

Seven West increased as much as 2% to $4.51 after the company agreed with Deutshce Bank to issue 17.8 million shares to Seven Group in September as part of its dividend reinvestment plan. The deal for the share transaction is worth $81.4 million.

Tiger Airways reported group operating profit for the year ending in March of S$57 million and said it will assign two new planes from the Australian market to Asia.

The company will keep the fleet of 10 planes for the Australian market and blamed $7.1 million loss in the Australian market on the recent Queensland flooding in January.