Market Updates

Australian Stocks Weak; Home Prices Decline

Marcus Jacob
30 Sep, 2011
New York City

    Australian stock closed flat after a volatile session. At the end of the week the benchmark index added 2.7% and in September the index declined 6.1%. Australian home prices declined 0.4% in August.

[R]6:30 PM Sydney – Australian stock closed flat after a volatile session. At the end of the week the benchmark index added 2.7% and in September the index declined 6.1%. Australian home prices declined 0.4% in August.[/R]

Stocks in Australia traded lower following a regional sell-off in Asia after China reported third monthly weakness in manufacturing. The global backdrop was also weak and sentiment weakened dragging the dollar lower.

China''s purchasing managers'' index was 49.9 in September, unchanged on August, but higher than the flash estimate of 49.4, final results from Markit Economics showed today.

The market enthusiasm did not last and before the opening German lawmakers overwhelmingly passed the proposal to expand the European bailout fund. The European markets were reassured after the level of support Chancellor Angela Merkel and her party received from the opposition members.

At least in trading today, the solid vote in the favor of European rescue fund expansion supported European indexes and the market opening in New York but a chorus growing minority of investors are still factoring the eventual Greek default that may happen as early as June 2012.

The German vote will allow the nation to increase its participation in the European Financial Stability Facility to €211 billion from €123 billion and expand the rescue fund to provide emergency loans to troubled nations.

German people have been against the setting up of such a facility and expanding and several investors are also worried that no amount of loans to the Southern European nations will solve the expanding sovereign default crisis.

A survey released by Bloomberg news indicated at least 55% of institutional investors are factoring Greek default or at least one nation leaving the euro zone in the next one year.

The ASX 200 index increased 0.3 to 4,008.6 and All Ordinaries index rose 2.2 to 4,070.1.

The Australian dollar fell 0.6% to US$0.973.

In trading, 925.3 million shares changed hands worth $4.21 billion and gainers and losers were nearly equal amount.

Stock Movers

BHP Billiton Ltd decreased $0.02 to $35.02 and Rio Tinto Ltd declined $0.65 to $61.80. Newcrest Mining Limited declined $0.08 to $34.08. Lynas Corp fell 2 cents to $1.09.

Fortescue Metals decreased 3 cents to $4.42. Iluka Resources increased 5 cents to $12.51 and Paladin Energy Ltd increased 5 cents to $1.22.

Oil Search Limited increased 4 cent to $5.66, Santos Limited rose 10 cents to $11.37 and Woodside Petroleum increased $0.34 to $32.48.

Commonwealth Bank of Australia increased $0.04 to $45.55 and National Australia Bank fell $0.13 to $22.37. ANZ edged down $0.06 to $19.52. Westpac decreased $0.20 to $20.34.

The banks were in focus after the latest survey of home prices indicated another monthly decline. The RP Data-Rismark home value index declined 0.4% in August and fell 3.7% in the year to the month.

The prices in Sydney were flat and decreased 0.3% in the year and in Perth fell 2% in the month and declined 7.1% in the year.

Qantas Airways Limited added 1 cent to $1.41.

David Jones Limited was unchanged at $3.02 and Wesfarmers decreased $0.07 to $31.59. This week, Wesfarmers agreed to sell its Premier Coal business to China based Yanzhou Coal Mining for $297 million.

Woolworths Limited decreased 14 cents to $24.86. James Hardie Industries decreased 2 cents to $5.75.

Stockland added 4 cents to $2.91 and Westfield Group decreased 7 cents to $7.75. Goodman Group edged up 0.005 cents to $0.575.

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