Australian Stocks Reflect Weak Commodities; Qantas Strikes Deepen

Marcus Jacob
20 Oct, 2011
New York City

Australian stocks declined after commodities prices edged lower and on the worries that the turmoil in the euro zone and in the U.S. may lead to a lower demand. Qantas faces federal government mediation as the workers strikes widen and extend in the third week.

[R]6:00 PM Sydney – Australian stocks declined after commodities prices edged lower and on the worries that the turmoil in the euro zone and in the U.S. may lead to a lower demand. Qantas faces federal government mediation as the workers strikes widen and extend in the third week.[/R]

Stocks in Australia dropped as investors worried that the weekend summit in Europe will offer yet another temporary fix.

Crude oil and copper dropped in Asian trading on the worries that the turmoil in Europe and economic weakness in the U.S. will lower the demand.

However, BHP Billiton chairman Jacque Nasser commented before annual meeting that the demand from China and the rest of Asia is not expected to suffer and the company is on track to finish its expansion plan of $80 billion in the next five years.

Nasser acknowledged that prices of commodities and iron ore have softened in the last few weeks as customers monitor inventories and “behave conservatively.”

The ASX 200 index decreased 68.8 or 1.63% to 4,144.9 and All Ordinaries index fell 68.0 or 1.6% to 4,206.8.

The Australian dollar added 0.3% to US$1.025.

Trading volume decreased to 1.55 billion shares worth $4.69 billion and for every rising stock, more than two stocks declined.

Stock Movers

BHP Billiton Ltd closed down 92 cents at $35.48 and the company chairman sounded confident note ahead of the annual general meeting and Rio Tinto Ltd fell $2.23 to $62.85.

Lynas Corp rose 3 cents to $1.12 on above average trading volume and a day ago media reports noted that the company has not won the license to import rare earth in Malaysia.

Fortescue Metals decreased 21 cents to $4.31 as commodities prices eased on the global economic worries.

Linc Energy fell 1 cent to $2.06 and Leighton Holdings increased 2 cents to $20.52 and said it will challenge the latest ratings review from Standard & Poor’s.

Oil Search Limited decreased 14 cents to $5.81, Santos Limited fell 27 cents to $12.07 and Woodside Petroleum declined $1.46 to $33.60.

Cochlear Limited fell $1.01 to $55.44 and a day ago the maker of bionic ears increased its dividend to $1.20 a share for the year from $1.05 a share.

Commonwealth Bank of Australia closed down $0.29 to $47.72 and National Australia Bank decreased 32 cents to $24.28. ANZ edged down $0.18 to $21.53. Westpac fell $0.32 to $21.53.

David Jones Limited closed up 1 cent to $3.02 and Wesfarmers Limited decreased $0.64 to $31.54.

Woolworths Limited increased 6 cents to $24.59 and James Hardie Industries SE increased 9 cents to $5.85. Treasury Wine Estate fell 1 cent to $3.89.

Qantas Airways Ltd closed unchanged $1.48 after the company struggles to maintain flight schedules and may be forced to ground more planes.

Chief executive Alan Joyce warned yesterday that the company may have to eliminate jobs if more planes are taken out of service and rejected the union’s offer to drop industrial action including overtime ban.

Tourism industry recently urged the government to intervene and Transport Minister Anthony Albanese exhorted each side to “take a deep breath.” The federal government may be forced to step in if the dispute is not resolved ahead of holiday bookings.