Australian Index Down 14% from April Peak; Rio Tinto Net Up 30%

Marcus Jacob
04 Aug, 2011
New York City

Australian stocks fell to the lowest last seen in July 2009 and dropped 14% from its peak in April. Miners and banks led the decliners for the second week in a row. Rio Tinto said first half net soared 30% and left its outlook for the rest of the year intact. The Australian dollar declined 1.8%.

[R]4:30 PM Sydney – Australian stocks declined to the lowest last seen in July 2009 and dropped 14% from its peak in April. Resource linked stocks and banks led the decliners for the second week in a row. Rio Tinto said first half net soared 30% and left its outlook for the rest of the year intact. The Australian dollar declined 1.8%.[/R]

Australian stocks continued their slide for the second week in a row and dropped to the lowest in the last two years. The index also declined 14% from its peak only three months ago as investors focused on the elevated sovereign debt stress in the euro-zone.

The U.S. economy may need third stimulus package as the prospect of the recession rose on the weak reading in the service and manufacturing sectors.

The ASX 200 index decreased 56.30 or 1.3% to 4,276.30 and All Ordinaries index fell 1.3% or 55.40 to 4,353.20. The benchmark ASX 200 index is now down 14% from its peak in April.

The Australian dollar decreased 1.8% to US$1.05 after global economic worries dragged the currency lower.

Stock Movers

Energy and miners traded higher after oil declined and gold surged $8 to $1,676.50 an ounce in New York trading.

BHP Billiton Ltd fell $0.09 to $40.06 and Rio Tinto decreased $1.02 to $76.58. Newcrest Mining Ltd decreased 10 cents to $40.65. Aquarius Platinum Ltd added 2 cents to $3.99.

Rio Tinto said first half profit increased 30% to $7.6 billion from $5 billion, including the gain of $810 million in foreign exchange. Chief executive Tom Albanese issues a positive outlook for the rest of the 2011 and 2012 and highlighted “credit tightening in developing countries” and “the threat of financial crisis in Europe and the U.S.”

Woodside Petroleum Limited declined 1.9% or $0.72 to $36.50 and Santos Limited fell 2.4% or 25 cents to $12.34. Origin Energy fell 2.5%.

Energy Resources declined 9.7% to $3.92 and the uranium miner continued to move ahead with its plan for an underground drilling to extend its Ranger mine that is expected to cost $120 million.

Banks closed lower after the debt problems in the U.S. and Europe lowered banks in Asia on the rising worries that the record bond yields in Italy and Spain may force another crisis in the euro-zone.

Commonwealth Bank of Australia decreased $1 to $47.55 and National Australian Bank decreased 53 cents to $22.67. ANZ declined 48 cents to $19.81. Macquarie Group declined 2.4% to $25.05.

Leighton declined 0.4% to $20 after it cuts estimate of loss to $408 million from $427 million and retained its fiscal 2012 net income outlook between $600 million and $650 million. Investors were surprised after the company took additional $278 million in write down for its desalination plant in Victoria.