Australian Index Drops 3.5%; ANZ, QBE, Billabong in Focus

Marcus Jacob
19 Aug, 2011
New York City

The Australian benchmark index extended losses for the second day and declined 1.7% in the week. The index is down 13.6% in the year as commodities prices weaken as the U.S. and European economies struggle. Billabong profit declined and ANZ earnings net expectations.

[R]7:30 PM Sydney – The Australian benchmark index extended losses for the second day and declined 1.7% in the week. The index is down 13.6% in the year as commodities prices weaken as the U.S. and European economies struggle. Billabong profit declined and ANZ earnings net expectations.[/R]

Stocks in Australia closed lower after a sell-off in Asian markets on the renewed global economic worries. The benchmark indexes plunged in Asia after extending losses for the second day as commodities prices fall in the region and the yen hovers near record high.

The market index in Tokyo dropped 2.5%, in Hong Kong fell more than 3% and Shanghai declined 1% and in Mumbai dropped more than 2%. The index in South Korea plunged 6.2%, in Singapore dropped 3.2% and in Indonesia declined 4.4%.

European indexes slumped more than 4% after investors focused on the weak U.S. economic data and questioned the health of the euro-zone banking system. The markets were weak at the opening after Asian markets plunged between 2.5% and 6% and feeble jobless claims, home sales and a regional manufacturing data in the U.S.

Market jitters were also compounded after one medium bank in Europe decided to tap $500 million emergency loan facility available from the European Central Bank. Though the borrowed amount is relatively small, it nevertheless put investors on the edge and the index in Germany dropped as much as 4.5% in the early trading.

The Federal Reserve Bank of New York’s decision to investigate the U.S arms of many European banks led to a steep sell-off yesterday of bank stocks renewing concerns about the state of the banks in the region.

The ASX 200 index fell 147.50 or 3.5% to 4,101.90 and the broader All Ordinaries index declined 147.5 or 4.4% to 4,171.90. The broader index has been under pressure since it last crossed 5,000 on April 16, 2010.

For the week, the ASX 200 index declined 1.7% and for the year the index is down 13.6%.

The Australian dollar edged up a fraction to $1.024.

In trading, turnover rose to $6.3 billion and the number of equity trades increased to 882,419 from 788,925 on Thursday.

Stock Movers

Energy stocks were among the leading decliners after crude oil price declined 5% in New York trading to

Woodside Petroleum declined $1.43 to $35.44, Santos Ltd decreased 61 cents to $11.07 and Oil Search fell 33 cents to $6.
Santos reported first half net earnings increased 13% to $236 million.

Rio Tinto decreased $3.90 to close at $69.42 and BHP Billiton fell $1.60 to $37.50. Fortescue Metals Group closed down 30 cents $5.75.

Newcrest Mining increased $1.88 cents or 2.3% to $39.54 after gold price increased $35.55 to US$1,827.70.

Billabong dropped 26 cents to $3.82 after it reported full-year profit declined 18.4% to $119.1 million and the company blamed the decline on higher dollar.

Commonwealth Bank decreased $1.36 to close $45.96 and National Australia Bank fell 76 cents to $22.40. Westpac declined 73 cents to $19.65 and ANZ decreased 92 cents to close at $19.50.

ANZ reported third quarter earnings of $1.4 billion and said that trading income in the fourth quarter will remain weak and also denied that the bank suffered a significant trading losses in the quarter.

QBE Insurance declined 5.6% to $12.95 and earlier in trading declined to a 7-year loss after it lowered its profit outlook for the year to between 11% and 14% from the previous estimate between 15% and 18%.

Foster’s Group decreased 7 cents to $4.93 and a day ago the brewing company rejected higher hostile offer from SABMiller.