Australian Indexes Up 1.2%. Market Reverses 5.5% Plunge

Marcus Jacob
09 Aug, 2011
New York City

Australian stocks defied region-wide plunge and rebounded from the earlier plunge of 5.5% to close up 1.2%. The sharp reversal was driven by a broad buying and after China reported weaker than expected inflation in July. Gold soared but crude oil dropped 4.5%.

[R]4:30 PM Sydney – Australian stocks defied region-wide plunge and rebounded from the earlier plunge of 5.5% to close up 1.2%. The sharp reversal was driven by a broad buying and after China reported weaker than expected inflation in July. Gold soared but crude oil dropped 4.5%.[/R]

The Australian indexes plunged for the sixth day in a row at the opening and quickly descended to a loss of 5.5%. The sharpest decline in the index was expected after the U.S. indexes plunged more than 6% in the New York trading after investors reacted for the first time to the debt rating downgrade.

The Australian index rebounded after China reported lower than expected increase in non-food price index in July. The Australian index was the lone gainer in the regional trading and the indexes in Hong Kong plunged more than 5% and in Japan and Korea fell more than 1.5% and in India dropped 1.3%.

The ASX 200 index added 48.70 or 1.2% to 4,034.80 and All Ordinaries index gained 1% or 40.0 to 4,096.70. The benchmark ASX 200 index is down 21% from its peak in April and the index is trading near a 2-year low.

The Australian dollar decreased 1.1% to US$1.014 after global economic worries dragged the currency lower. The currency earlier dropped as low 99.28 cents before inching back up above parity.

In, trading, 4.2 billion shares changed hands worth $10.2 billion and 841 shares gained, 458 declined and 302 closed unchanged.

Stock Movers

Energy and miners traded lower after oil declined 4.3% to $80.45 a barrel in New York trading and gold soared $59.10 to $1,764.20 an ounce in New York trading.

BHP Billiton Ltd added $0.45 to $37.05 and Rio Tinto increased $1.11 to $69.74. Newcrest Mining Ltd decreased 10 cents to $38.72.

Gold miners were generally higher after gold surged in Sydney trading. The price increased $37.12 to US$37.12.

OceanaGold, Philippines based gold miner led the stocks in the ASX 200 index with a surge of 19% to $2.10.

Woodside Petroleum Limited declined $1.00 to $34.81 and Santos Limited added 15 cents to $11.45. Origin Energy rose 2% or 26 cents to $13.57.

Banks closed rebounded after a 3-day sell-off.

Commonwealth Bank of Australia increased $1.66 to $47.28 and National Australian Bank increased 60 cents to $21.50. ANZ added 51 cents to $19.01.

NAB confirmed that the bank is expected to deliver $5.5 billion in annual profit after it reported strong June quarterly earnings.

Coca Cola Amatil soared 17 cents to $10.69 after it said it will consolidate its production at Ardmona facilities in Victoria after it reported profit declined of 28% in the first half.

JB Hi-Fi added 48 cents to $14.48 and a day ago it reported 8% decline in profit to $109.7 million. The earnings were up 13.3% to $134 million when one-time restructuring charges were not counted.

David Jones Limited added 5 cents or 1.9% to $2.72 and Wesfarmers Limited increased 8 cents to $27.83. Myer Holdings gained 5 cents to $2.19.