Australian Index Eases 3.9% in the Week

Marcus Jacob
29 Jul, 2011
New York City

The Australian benchmark index declined to 11-month low as the global economic growth was endangered by the irresponsible U.S. lawmakers. U.S. is only three days away from a debt default that could slow the incipient economic recovery and raise rates worldwide.

[R]4:30 PM Sydney – The Australian benchmark index declined to 11-month low as the global economic growth was endangered by the irresponsible U.S. lawmakers. U.S. is only three days away from a debt default that could slow the incipient economic recovery and raise rates worldwide.[/R]

Stocks in Australia edged lower for the fourth day this week as the prospect of the U.S. default became more likely. U.S. lawmakers failed to pass a key vote in the Republican Party controlled House that largely demanded cuts in social spending and keep military spending intact.

The bill was never brought to the floor as House Speaker could not muster enough votes in the support of the bill that aimed to cut $3 trillion in deficit and raise limit in two steps of $900 billion and $1.6 trillion.

With only three days left the focus has now shifted on the Senate to pass a bill that by tomorrow.

U.S. has racked up more than $5 trillion of debt during the eight years of former President George W Bush and passed $1 trillion of spending to avert a banking crisis that was finally approved by the Congress after the election of President Barack Obama.

U.S. total debt now stands at $14.3 trillion and the President Obama needs at least $1 trillion of more debt for each of the next two years.

Most of the increase in debt has gone in paying for wars in Iraq, Afghanistan and Libya and supporting defense lobby and prescription drug plan for the senior citizens.

The ASX 200 index decreased 39.20 or 0.9% to 4,424.60 and All Ordinaries index fell 0.85% or 38.70 to 4,500.50.

In trading, turnover decreased to 2.23 billion shares worth $5.7 billion and 397 shares increased, 683 decreased and 347 were unchanged.

The Australian dollar decreased to US$1.09 as world markets remain on edge after the U.S. lawmakers jeopardize the world economic growth.

The Australian Home Value Index tracked by the RP Data-Rismark fell 0.2% in June from May. The survey of 150,000 homes across the nation indicated softer price trend for the six months in a row and prices fell 0.9% in the second quarter.

The home price index declined in June after dropping 0.3% in May, 0.4% in April and 0.5% in March.

Home prices in Brisbane dropped 6.3% from a year ago and in Perth declined 4.7%. Sydney prices rose 0.5% from a year ago in the month.

Stock Movers

Energy related stocks closed higher after crude oil flirted near $100 a barrel. Origin Energy decreased 8 cents to $14.69 after it reported record full year sales and output.

BHP Billiton Ltd fell 61 cents to $41.43 and Rio Tinto decreased $1.20 to $80.00. Newcrest Mining Ltd decreased 62 cents to $39.55.

Worley Parsons dropped 99 cents to $27.51 and Lynas added 6 cents to $2.15.

Banks extended losses for the second day on the worries that a sudden rise in inflation may prompt a rate hike at the next central bank meeting. The prospect of the U.S. default also unnerved confidence in the sector.

Commonwealth Bank of Australia decreased 17 cents to $49.27 and National Australian Bank decreased 18 cents to $24. ANZ declined 16 cents to $20.83.

Macquarie Group added $0.42 to $27.57 after the investment bank estimated lower first half results compared to a year ago.