Australian Stocks Rebound; Consumer Spending to Recover

Marcus Jacob
26 Jul, 2011
New York City

Australian stocks rebounded as commodities prices hovered near the recent highs. The RBA Governor Glenn Stevens noted that rises in commodities prices shipped from Australia may stabilize but sounded optimistic about the improvement in consumer spending.

[R]4:30 PM Sydney – Australian stocks rebounded as commodities prices hovered near the recent highs. The RBA Governor Glenn Stevens noted that rises in commodities prices shipped from Australia may stabilize but sounded optimistic about the improvement in consumer spending.[/R]

Stocks in Sydney rebounded and looked beyond the current messy state of debt negotiations in the U.S.

President Barack Obama in a televised address to the nation urged lawmakers of both parties to finalize the debt talks as the nation flirts with the August 2 deadline before the federal government runs out of money.

Republican controlled U.S. House has been adamant and looking for spending cuts in the medical assistance and social security but prefers to preserve the wasteful military spending and agriculture subsidies.

Separately, the Reserve Bank of Australia Governor Glenn Stevens said that consumer spending is expected to return to normal level as families are nearing the repair of household balance sheets.

He also said that two-speed economic recovery is likely to persist but seven-decade high terms of trade in iron ore, coal and liquefied natural gas “has probably to come to an end.” Household income growth may moderate in the medium term.

The ASX 200 index increased 42.90 or 1% to 4,573.30 and All Ordinaries index added 0.9% or 42.50 to 4,646.30.

In trading, turnover increased to 2.08 billion shares worth $4.84 billion and 649 shares increased, 425 decreased and 357 were unchanged.

The Australian dollar increased to US$1.0946. The Australian dollar traded at a new three-decade high against the British pound and American dollar.

Stock Movers

Energy related stocks closed higher after crude oil flirted near $100 a barrel.

Woodside Petroleum added 63 cents to $39.48 and Origin Energy increased 26 cents to $15.22.

Oil Search Limited increased 18 cents to $6.91 after the company reported second quarter operating revenues increased 42%.

Retailers closed lower. Wesfarmers decreased 20 cents to $30.22 and Woolworths declined 2 cents to $27.40.

BHP Billiton Ltd added 46 cents to $43.52 and Rio Tinto increased 93 cents to $82.99. Newcrest Mining Ltd decreased 17 cents to $40.18.

Banks closed higher despite a sell-off last on the worries that the U.S. dangerously flirting with a default if debt ceiling is not raised by August 2.

Commonwealth Bank of Australia increased 1.4% or 68 cents to $50.22 and National Australian Bank increased 19 cents to $24.82. Westpac Banking Corp added 10 cents to $21.36. ANZ rose 24 cents to $21.55.