Australian Stock in Cautious Advance; Mortgage Delinquencies Rise

Marcus Jacob
28 Sep, 2011
New York City

Australian stocks rebounded at the opening but pared gains in the afternoon. Nufarm reported a higher net loss but also said net profit before charges rose 68%. Australia approved the purchase of Foster

[R]6:30 PM Sydney – Australian stocks rebounded at the opening but pared gains in the afternoon. Nufarm reported a higher net loss but also said net profit before charges rose 68%. Australia approved the purchase of Foster’s Group by SABMiller.[/R]

Australian stocks gained at the opening on the strong rally in Europe and American markets but trimmed advances in the afternoon.

The growing positive sentiment towards the euro zone has been dashed in the past with the lack of progress in resolving the Greek crisis and the widening debt contagion in the region.

The market optimism was driven on the hopes that the policymakers are looking to trim Greek debt in half, recapitalize the largest 50 banks and use the European Central Bank and the recently established rescue fund to offer more loan guarantees.

Market enthusiasm was tempered after 7 of the 17 member euro zone still demand higher sacrifice from banks while bailing out Greece and other troubled nations in the region.

The ASX 200 index increased 34.90 or 0.9% to 4,039.5 and All Ordinaries index soared 34.2 or 0.8% to 4,097.7.

The Australian dollar fell 0.1% to US$0.9875.

The Australian Competition and Consumer Commission approved the sale of Foster’s Group to SABMiller.

After the merger SABMiller will unwind its beer joint venture with Coca-Cola Amatil known as Pacific Beverages. The competition commission said that the dismantling of the venture is not likely to raise substantial competition concerns.

Stock Movers

BHP Billiton Ltd increased $0.17 to $35.52 and Rio Tinto Ltd added $0.63 to $64.05. Newcrest Mining Limited gained $0.69 or 2% to $35.11. Lynas Corp fell 6% to $1.11.

Fortescue Metals decreased 39 cents or 8% to $4.52. Iluka Resources dropped 33 cents to $12.94 and Paladin Energy Ltd closed unchanged at $1.31.

Oil Search Limited decreased 3 cent to $5.67, Santos Limited rose 3 cents to $11.06 and Woodside Petroleum increased $1.08 to $31.94.

Commonwealth Bank of Australia decreased $0.05 to $45.50 and National Australia Bank added $0.57 to $22.95. ANZ edged down $0.05 to $19.74. Westpac increased $0.40 to $20.65.

The rating agency, Moody’s noted in a report that Australia’s homeowners’ ability to pay mortgage has deteriorated “materially” in the last one year.

Of the 65 regions in the country, 11 are performing either “poorly or very poorly” and more than half of underperforming regions are in NSW.

Banks are competing to issue mortgages to families but mining sector boom has failed to produce jobs and families are battling higher inflation and rising costs.

Delinquent mortgage rate has increased to 5.2% in NSW and 5.3% in Western Australia compared to national average of 1.67%.

Qantas Airways Limited added 1 cent to $1.45.

David Jones Limited closed up 13 cents to $2.93 and Wesfarmers increased $0.33 to $31.88. Wesfarmers agreed to sell its Premier Coal business to China based Yanzhou Coal Mining for $297 million.

Woolworths Limited increased 17 cents to $25.08 following a rally in retail stocks.

James Hardie Industries increased 13 cents to $5.99.

Stockland added 13 cents to $2.94 and Westfield Group increased 35 cents to $7.95. Goodman Group edged up 0.2 cents to $0.595.

Nufarm Limited increased 9 cents to $4.32 after the agrochemical company announced net loss for the year ending in July of $49.9 million compared to $22.6 million a year ago.

The net excluding one -time charges increased 68% to $98.3 million from $58.6 million. The company in the year took charges of $148 million including asset impairments in Brazil of $70 million.