Australian Index Drops 1%; Centro Directors Guilty

Marcus Jacob
27 Jun, 2011
New York City

Australian stocks declined tracking losses in Asia and international markets. Commodities fell and oil declined 1.2%. Banks led the decline on the worries that access to international wholesale markets may shrink if world economy falters.

[R]5:00 PM Sydney – Australian stocks declined tracking losses in Asia and international markets. Commodities fell and oil declined 1.2%. Banks led the decline on the worries that access to international wholesale markets may shrink if world economy falters.[/R]

Australian stock index and the broader market declined as the debt worries in the U.S. and Europe unnerved investors. Greece is scheduled to approve deeply popular austerity measures this week and U.S. lawmakers are still struggling to resolve debt level.

Investors are also facing the end of the U.S. Federal Reserve printing money at the end of this week which is sold to the people as quantitative easing.

Most of the increase in debts by the U.S. government has gone in supporting fifteen largest banks and the second financial stimulus provided by the Fed has supported the stock market and the bank profits with very little flowing to the broader economy.

The economies of the U.S. and the European Union are struggling three years after the sharp decline in 2008 and U.S. banks continue to restrict lending to small businesses as household debt barely dented since 2008. Nearly quarter of all homeowners with mortgages have home values below the home loans.

The ASX 200 index decreased 46.30 or 1% to 4,461.8 and All Ordinaries index fell 1.1% 51.2 to 4,513.80.

The Australian dollar decreased to US$1.042 and crude oil dropped 1.2% to US$90.01.

In trading, turnover declined to 2.31 billion shares worth $4.25 billion. Of the stocks traded, 236 stocks increased, 1,032 decreased and 351 closed unchanged.

Stock Movers

BHP Billiton traded lower 14 cents to $42.20 and Rio Tinto decreased 60 cents to $79.80.

FerrAus increased 15 cents to 79 cents after the company recommended shareholders to accept the offer from Atlas Iron to fend off the hostile offer from Hong Kong based Wah Nam.

Energy related companies declined after crude oil futures of immediate delivery extended losses by 1.2% after the IEA decided to release 60 million barrels from reserves of member nations.

Santos Ltd declined 33 cents to $12.94 and Woodside Petroleum fell 24 cents to $39.96. Oil Search decreased 4 cents to $6.37.

Leighton declined 65 cents to $20.24.

Banks closed lower for the second day in a row on the growing worries that international wholesale market may become restrictive for Australian banks to access.

ANZ decreased 23 cents to $21.24, National Australia Bank declined 16 cents to $24.50 and Commonwealth Bank fell 68 cents to $50.45.

Centro Retail declined 1.5% to 33 cents and was the most active with 117 million shares after the Federal Court found eight current and former directors guilty of approving documents that hid US$2 billion in liabilities.