Australian Retail Sales, Building Approvals Fall; Stocks Struggle

Marcus Jacob
04 Jul, 2011
New York City

The Australian benchmark index struggled to close higher after retail sales and building approvals fell. Retail sales fell 0.6% in May as shoppers take advantage of stronger dollar and look for bargains overseas on the Internet.

[R]4:30 PM Sydney – The Australian benchmark index struggled to close higher after retail sales and building approvals fell. Retail sales fell 0.6% in May as shoppers take advantage of stronger dollar and look for bargains overseas on the Internet.[/R]

Australian stocks opened higher on the solid advances in the U.S. and a rise in commodities prices. The benchmark index opened up 1% but lost half of its gains after the release of weaker than expected retail and construction data.

The ASX 200 index increased 19.50 or 0.4% to 4,610.7 and All Ordinaries index added 0.5% or 22.50 to 4,670.

Markets in Asia closed higher on the back of the largest weekly increase in the U.S. indexes in two years. The benchmark indexes in Japan and Korea gained more than 1%, in Shanghai added 1.8% and in India increased 0.5%.

The Australian dollar decreased 0.5% to US$1.073 after weak retail sales and construction data and a rebound in job advertising notices. The dollar closed at 86.72 yen up from 86.48 yen.

The Australian Bureau of Statistics said retail sales decreased 0.6% to $20.61 in May from $20.74 billion in April. The sales had increased 1.2% in April. The decline in retail sales surprised economists who were expecting an increase between 0.2% and 0.3%.

Building approvals in May dropped 7.9% from April according to a separate report by the statistics bureau. Earlier, a private survey conducted by RP Data- Rismark showed metropolitan home prices decreased 0.3% in May and fell 2.3% from a year ago but still near 20-year high.

Stock Movers

Retailers led the decliners in the market after the decline in May sales.

Woolworths decreased 5 cents to $27.72 and Myer fell 1 cent to $2.58. Harvey Norman decreased 2 cents to $2.42.

Banks were among the leading decliners.

Commonwealth Bank increased 14 cents to $52.06 and ANZ and National Australia Bank edged lower.

Resources linked stocks closed higher on the rise in commodities prices in international markets on Friday.

BHP Billiton increased 25 cents to $44.02 and Rio Tinto added 32 cents to $83.14.

Murchison Metals decreased 1.5 cents to 75 cents as the company confirmed the cost of Oakajee and port and rail project is ahead of previous estimate.