Australian GDP Shrinks 1.2% on Weather; Fortescue Chief Resigns

Marcus Jacob
01 Jun, 2011
New York City

Devastating weather dragged the economy in the first quarter. The GDP shrank 1.2%, first decline since the fourth quarter of 2008 and exports plunged 8.7%, the largest fall in 37 years. The dollar gained. Fortescue Metals chief executive Andrew Forrest resigned.

[R]4:30 PM Sydney – Devastating weather dragged the economy in the first quarter. The GDP shrank 1.2%, first decline since the fourth quarter of 2008 and exports plunged 8.7%, the largest fall in 37 years. The dollar gained. Fortescue Metals chief executive Andrew Forrest resigned.[/R]

The ASX 200 index decreased 1.0 to 4,707.30 and the All Ordinaries declined 0.3 to 4,788.60.

In stock trading, turnover decreased to 2.21 billion shares worth $4.48 billion. Of the shares traded 554 stocks increased, 604 declined and 381 were unchanged.

The Australian dollar increased a fraction to close at US$1.073 and crude oil declined 10 cents to US$102.60.

Gross domestic product declined 1.2% in the first quarter to March after expanding at 0.8% in the fourth quarter, according to the data released by the Australian Bureau of Statistics.

The economy shrank for the first time since the December quarter 2008. The flooding and cyclone in March dragged the economy to the steepest decline last seen since first quarter of March.

The exports in the quarter dropped the most in 37 years by 8.7% on the account of floods and cyclones as miners struggled to ship coal and iron ore.

Stock Movers

Fortescue Metals increased 17 cents to $6.69 and the company said chief executive Andrew Forrest will resign and replaced by chief operating office Nev Power. Forrrest will assume the non-executive chairman position.

Forrest is also battling a court case brought by the Australian Securities and Investments Commission. The High Court is expected to rule on the matter later in the year that may bar him from a position at any public company.

The company also advanced its plan to Pilbara region iron ore mining capacity to 155 mtpa from 55 mtpa.

BHP Billiton increased 17 cents to $44.53 and Rio Tinto increased 5 cents to $81.55.

Banks in trading declined but managed to trim losses by close.

ANZ declined 13 cents to $22, National Australia Bank dropped 41 cents to $26.07, Westpac fell 18 cents to $21.95 and Commonwealth Bank of Australia closed down 26 cents to $50.36.