Australian Stocks Surge 2.5%; Woolworths, NAB, Ten Network in Focus

Marcus Jacob
27 Oct, 2011
New York City

Australian stocks surged in a truncated trading session after the exchange struggled with technology. Woolworths reported first quarter sales increased 4.9% and cited continued weak environment. National Australia Bank reported higher net on lower bad debt charges.

[R]6:00 PM Sydney – Australian stocks surged in a truncated trading session after the exchange struggled with technology. Woolworths reported first quarter sales increased 4.9% and cited continued weak environment. National Australia Bank reported higher net on lower bad debt charges.[/R]

Brokers and traders were driven to anger after Australian Stock Exchange had technical difficulties and could not open for four hours in the morning. Investors were looking to react to news on the euro zone and earnings from National Australia Bank and Woolworths.

Trading was suspended at 10:05 am local time and could not reopen for four more hours.

Australian stocks rallied at the opening after European leaders agreed on Greek bond restructuring, bank recapitalization plan and the leverage of the rescue fund.

French President Nicholas Sarkozy announced the agreement after ten hours of marathon negotiation with bankers, heads of states and policy makers.

Sarkozy said banks have agreed on a “voluntary” 50% reduction in Greek debt to €102 billion and allow Greece to keep its debt burden to 120% of its GDP in the rest of the decade.

Greece will also offer €30 billion cash incentive to banks to soften the blow of debt cut and the rest of €70 billion will be exchanged for 30-year bond for 6%.

The agreement was also reached on asking banks to recapitalize by tapping additional €106 billion of new capital.

However, investors are still not convinced how the European Union will leverage its rescue fund from the current €440 billion to €1 trillion. French President Sarkozy is expected urge China and Japan to participate in the fund.

The euro surged to $1.401 in trading on the agreement.

The ASX 200 index increased 2.4% or 105.7 to 4,348.2 and All Ordinaries index gained 2.4% or 103.1 to 4,403.9.

The Australian dollar gained 2.2% to US$1.063.

In trading, 1.3 billion shares changed hands worth $4.25 billion. Of the shares traded 667 increased, 272 decreased and 313 were unchanged.

Stock Movers

BHP Billiton Ltd closed up $1.41 to $38.35 and Rio Tinto Ltd added $2.96 to $69.70.

Fortescue Metals increased 41 cents to $5.03, Lynas Corporation Limited added 8 cents to $1.27 and Iluka Resources gained 73 cents to $16.32.

Oil Search Limited increased 24 cents to $6.42, Santos Limited rose 86 cents to $13.31 and Woodside Petroleum added 97 cents to $35.80.

Cochlear Limited rose $1.10 to $59.00.

Commonwealth Bank of Australia closed up 88 cents to $49.99 and National Australia Bank increased 92 cents to $25.87. ANZ edged up 41 to $22. Westpac gained 46 to $22.76.

National Australia Bank said its full-year net increased 23.6% to $5.22 billion as the bank focused on personal banking services. Total revenues declined 1% to $16.8 billion and on cash basis increased 5.7% to $17.6 billion.

The company delivered better than expected results in the UK and New Zealand but its wealth management division delivered weaker than expected results. Bad debt charge in the year declined.

David Jones Limited closed up 17 cent to $3.53 and Wesfarmers Limited increased 78 cents to $32.68.

Woolworths Limited decreased 7 cents to $24.08 and James Hardie Industries SE increased 14 cents to $6.25. Treasury Wine Estate closed up 4 cents to $3.88.

Woolworth said sales in the first quarter increased 4.9% from a year ago to $14.6 billion and sales at the supermarket division rose 5.8% to $12.56 billion and in general merchandise division declined 1.6% to $1.52 billion.

Qantas Airways Ltd closed up 6 cents to $1.57.

Ten Network increased 7.5 cents to 92.50 cents and the television broadcaster reported 91% decline in profit and also released its plan to turn around its business.