Australian Markets Flat; Unemployment Rises to 5.1%

Marcus Jacob
11 Aug, 2011
New York City

Stocks in Australia seesawed all day and closed nearly unchanged after bargain hunters searched for values amid a weakening global economic backdrop. July unemployment rose to 5.1% from 4.9% in June. David Jones lowered its earnings outlook and reported weak quarterly sales.

[R]4:30 PM Sydney – Stocks in Australia seesawed all day and closed nearly unchanged after bargain hunters searched for values amid a weakening global economic backdrop. July unemployment rose to 5.1% from 4.9% in June. David Jones lowered its earnings outlook and reported weak quarterly sales.[/R]

Stocks in Australia traded volatile as bargain hunters stepped to support the market on weak global sentiment. The indexes opened lower after the U.S. indexes fell more than 4% in overnight trading.

However, fund managers decided to add equity holdings and cited cheap valuations and strong corporate balance sheets. However, Australian valuations are not cheap when compared to declining market multiples in Asia and Europe.

European markers are down at 14% for the year and the indexes in Switzerland, Italy, Stockholm and Greece are down between 20% and 23% in the year.

The unemployment in July increased to 5.1% from 4.9% in June and the number of unemployed declined 100.

The Australian Bureau of Statistics said full time unemployed decreased 22,200 in the month to 8.06 million and part time increased 22,000 to 3.4 million.

The ASX 200 index added 0.50 to 4,140.80 and All Ordinaries index fell 3.9 to 4,203.50. The benchmark ASX 200 index is down 19% from its peak in April and the index is trading near a 2-year low.

The Australian dollar decreased 0.9% to US$1.02 after global economic worries dragged the currency lower.

In, trading, turnover declined to 3.05 billion shares changed hands worth $8.3 billion and 1,053 shares gained, 193 declined and 234 closed unchanged.

Stock Movers

News Corp increased 54 cents to $14.75 after the troubled media conglomerate reported 8% increase in net profit. Chief Executive Officer is facing hostile shareholders who are increasingly demanding his resignation.

News Corp is facing multiple inquiries in the UK phone hacking scandals and hostile lawmakers that are demanding significant changes in how the company collects news.

In New York trading, Gold traded above platinum for the second day since December 2008.

BHP Billiton Ltd fell $0.47 to $37.93 and Rio Tinto decreased $1.94 to $70.41. Newcrest Mining Ltd increased $1.49 to $40.74.

Iluka Resources fell $0.58 to $15.50.

Energy futures edged lower by 75 cents to $80.56 a barrel in New York close.

Woodside Petroleum Limited increased $0.7 to $36.99 and Santos Limited fell 27 cents to $11.63. Origin Energy rose 4 cents to $13.98.

Linc Energy, the coal steam energy maker, fell 6 cents to $2.19.

Commonwealth Bank of Australia increased $0.35 to $48.58 and National Australian Bank increased $0.10 to $22.90. ANZ added 29 cents to $20.09.

Telstra added 16 cents to $2.99 after the company guided higher profit in the current year.

JB Hi-Fi added 23 cents to $15.68, David Jones Limited fell 18 cents or 6.4% to $2.62 and Wesfarmers Limited decreased 30 cents to $28.25.

David Jones declined 18 cents to $2.62 after the department stores lowered the profit forecast for the first half of current fiscal year and cited weak consumer outlook.

The department stores said sales in the fourth quarter ending in July declined 15% from a year ago quarter to $462.1 million. The sales declined 10.3% after adjusting for calendar change of extra week in the previous quarter.

The retailer reaffirmed its earlier guidance of profit decline between 0.5% and 2% for its annual results scheduled to be released next month.