Australian Index Soar 2.6%; Newcrest Net Jumps 63%

Marcus Jacob
15 Aug, 2011
New York City

The benchmark indexes in Australia soared 2.6% after investors snapped up resources linked companies. Newcrest Mining reported a sharp jump in net income and guided 12% higher earnings per share in the current fiscal year.

[R]4:30 PM Sydney – The benchmark indexes in Australia soared 2.6% after investors snapped up resources linked companies. Newcrest Mining reported a sharp jump in net income and guided 12% higher earnings per share in the current fiscal year.[/R]

Australian stocks closed higher following a two-day rally last week. Confident investors drove the benchmark index higher after Japan reported less than expected shrinkage in the economy.

Institutional buyers stepped up and added to their positions on what they describe as cheap valuations but if the U.S. economy struggles and China’s exports falter than market may find a lower bottom.

The mining companies are still trading near price to earnings ratio of 13.5 compared to their last ten years average of seven.

The ASX 200 index added 110.3 or 2.6% to 4,282.90 and All Ordinaries index gained 108.90 or 2.6% to 4,346.80.

The Australian dollar decreased 0.4% to US$1.039 as the currency retraced 4 cents of the 10 cents loss in the last ten days of trading.

Stock Movers

BHP Billiton Ltd added $1.64 or 4.3% to $39.85 and Rio Tinto added $3 to $74.52. Newcrest Mining Ltd decreased 33 cent to $40.40.

Newcrest Mining said fiscal year net increased 63% to $908 million compared to $556.9 million a year ago. The gold miner estimated fiscal 2012 capital expenditure between $2 billion and $2.2 billion and production to range between 2.775 million ounces to 2.925 million ounces.

Production cost in the year jumped 65.3% to $493 per ounce and blamed it on higher integration costs of Lihir Gold assets in Papua New Guinea. Excluding these costs, production cost increased 7.4%.

Fortescue Metals Group Ltd increased 20 cents to $6.14 and Iluka Resources $1.15 to $16.61.

Woodside Petroleum Limited increased $1.30 to $38.35 and Santos Limited added 41 cents to $12.11. Origin Energy added 31 cents to $14.19.

Linc Energy, the coal miner and coal to energy developer, added 6 cents to $2.23.

Commonwealth Bank of Australia decreased $1.18 to $47.38 and National Australian Bank increased $0.61 to $23.57. ANZ fell 73 cents to $20.65. Westpac added 70 cents to $21.17.

Telstra added 6 cents to $3.11 and two days ago the company guided higher profit in the current year.

JB Hi-Fi fell 13 cents to $15.77, David Jones Limited added 2 cents to $2.65 and Wesfarmers Limited increased 91 cents to $29.66.

Leighton Holdings increased $1.64 to $21.49 after the company expressed confidence that it will generate $1 billion in annual net income in five years. The company also reported a loss of $408.8 million.

Ansell added 54 cents to $13.68 after the rubber gloves maker reported annual income of $122.7 million and estimated earnings per share to increase 12% in the current year.