Australian Construction Spending Surges on Mining Boom

Marcus Jacob
23 Nov, 2011
New York City

Australian stocks were under pressure after economic data from China, U.S. and Europe indicated a slow down. Australian construction work surged 12.5% in the quarter to September as miners accelerate capital spending. Virgin Blue said quarterly net rose.

[R]6:00 PM Sydney – Australian stocks were under pressure after economic data from China, U.S. and Europe indicated a slow down. Australian construction work surged 12.5% in the quarter to September as miners accelerate capital spending. Virgin Blue said quarterly net rose.[/R]

Stocks in Sydney trading declined for the third day in a row as world markets falter and the debt contagion in Europe reach to France.

The ASX 200 index fell 82.0 or 2% to 4,051.19 and All Ordinaries index decreased 1.9% or 78.4 to 4,125.80.

The Australian dollar was flat at US$0.984.

In trading, stock turnover fell to 1.96 billion shares worth $4.64 billion and 300 stocks closed higher, 682 fell and 384 were unchanged.

The latest construction data for the three months to September showed an increase of 12.5% from a year ago as miners accelerate capital spending. The surge in the activities was the largest since the record keeping began in 1986, according to the Australian Bureau of Statistics.

Residential construction declined 1.1% as new home construction fell 1.5% highlighting the weakness in the consumer sector.

Total seasonally adjusted engineering construction increased 22.6% and total building work edged up 0.6%.

Stock Movers

BHP Billiton Ltd closed down $1.09 to $35.60 and Rio Tinto Ltd decreased $2.20 to $62.30. Newcrest Mining decreased 20 cents to $35.05.

Rio Tinto’s bid to acquire a uranium miner Hathor Exploration for C$654 million by Canadian regulators.

Fortescue Metals Group decreased 30 cents to $4.60, Lynas Corporation Limited decreased 5 cents to $1.08 and Iluka Resources fell $0.21 to $14.50.

Uranium miner Paladin Energy decreased 3 cents to $1.43 and Peninsula Energy Ltd closed down 2 cents to 4 cents. Extract Resources decreased 5 cents to $7.43.

Oil Search Limited decreased 10 cents to $6.03, Santos Limited fell 24 cents to $12.33 and Woodside Petroleum closed up 24 cents to $35.39.

Commonwealth Bank of Australia closed down $1.13 to $46.27 and National Australia Bank decreased 76 cents to $22.37. ANZ edged down 44 cents to $19.10. Westpac fell 53 cents to $19.83.

David Jones Limited closed down 6 cents to $2.97 and Wesfarmers Limited fell 36 cents to $31.54. Harvey Norman decreased 3 cents to $2.02.

Woolworths Limited closed down 16 cents to $24.35 and James Hardie Industries SE decreased 12 cents to $6.38.

Stockland gained 4 cents to $3.14 after it reaffirmed full year guidance in the current fiscal year.

Ramsay Health Care Limited decreased 35 cents to $18.42.

Qantas Airways Ltd closed down 7 cents to $1.51, Virgin Australia fell 0.5 cent 36.5 cents but Flight Centre declined 66 cents to $18.10.

Virgin Australia said underlying profit in the fiscal first quarter was higher than a year ago despite the sharp rise in fuel costs and did not issue annual outlook on the global uncertainties. The airline also plans to add 250 additional cabin crew staff mostly based in New South Wales.

In the year ending in June, the airline lost $68 million compared to $21 million profit in the previous year. The latest year loss includes losses of $92 million linked to natural disasters and a meltdown of its reservation system.

Programmed Maintenance Services rose 1.5 cents to $2.01 after first half earnings swung to profit and the company forecasted an increase in earnings across all its operating divisions.