Australian Stocks Rebound; Macarthur Rejects Peabody Offer

Marcus Jacob
01 Aug, 2011
New York City

The Australian benchmark index rebounded from the lows of 11-month after the U.S. lawmakers agreed on a framework to cut spending and lift debt ceiling that may not cut unemployment and hut the economy more in the short term.

[R]4:30 PM Sydney – The Australian benchmark index rebounded from the lows of 11-month after the U.S. lawmakers agreed on a framework to cut spending and lift debt ceiling that may not cut unemployment and hut the economy more in the short term.[/R]

Australian stocks gained on the optimism that the U.S. debt agreement will remove the uncertainty and focus market attention on the global economic recovery. The spending cuts will increase unemployment above 9% and will fail to make any dent in the total deficit.

The deal between the lawmakers would cut $917 billion in spending over a decade and raise debt limit by $900 billion and seek another $1.5 trillion in savings by November through a special committee.

The ASX 200 index increased 73.20 or 1.7% to 4,497.80 and All Ordinaries index added 72.60 or 1.6% to 4,573.10.

In trading, turnover decreased to 1.88 billion shares worth $3.98 billion and 765 shares increased, 344 decreased and 339 were unchanged.

The Australian dollar decreased to US$1.105 on the optimism after the U.S. lawmakers agreed on the framework for the debt ceiling limit and spending cuts.

Macarthur Coal rejected the all-cash takeover offer from Peabody Energy and ArcelorMittal. The coal miner rejected the all-cash $15.50 a share and said it would recommend a $16 a share and $18 a share if 90% of shareholders approve the deal.

Stock Movers

Macarthur Coal gained 28 cents to $15.83 Peabody Energy and ArcelorMittal planned to take their takeover offer direct to shareholders.

BHP Billiton Ltd added 88 cents to $42.30 and Rio Tinto increased $1.52 to $81.52. Newcrest Mining Ltd decreased 62 cents to $39.55.

Lynas added 8 cents to $2.23 and Fortescue Metals gained 20 cents to $6.51.

Banks rebounded after two days of losses in the rally that lifted financials today.

Commonwealth Bank of Australia increased 82 cents to $50.09 and National Australian Bank added 49 cents to $24.49. ANZ gained 46 cents to $21.29.