Australian Stocks Struggle; David Jones Sales Drop 11%

Marcus Jacob
24 Nov, 2011
New York City

Australian stocks drifted lower and commodities prices struggled in Asian trading. Banks led the weak sectors as debt contagion in the euro zone overwhelmed German government bond auction. David Jones said quarterly sales dropped 11.2% and reaffirmed the weak profit outlook.

[R]6:00 PM Sydney – Australian stocks drifted lower and commodities prices struggled in Asian trading. Banks led the weak sectors as debt contagion in the euro zone overwhelmed German government bond auction. David Jones said quarterly sales dropped 11.2% and reaffirmed the weak profit outlook.[/R]

Australian stocks extended losses for the third week in a row as the benchmark index dropped a fraction. The ASX 200 index fell to a new low in the month.

The ASX 200 index fell 6.8 or 0.2% to 4,044.20 and All Ordinaries index decreased 0.3% or 10.5 to 4,115.30.

The Australian dollar was flat at US$0.984.

In trading, stock turnover fell to 2.25 billion shares worth $5.36 billion and for every stock that gained two stocks declined.

Stock Movers

BHP Billiton Ltd closed up 2 cents to $34.53 and Rio Tinto Ltd added $0.11 to $62.41. Newcrest Mining decreased 11 cents to $34.39.

Fortescue Metals Group decreased 6 cents to $4.54, Lynas Corporation Limited increased 4 cents to $1.12 and Iluka Resources rose $0.32 to $14.82.

Uranium miner Paladin Energy was unchanged at $1.43 and Peninsula Energy Ltd closed unchanged at 4 cents. Extract Resources increased 19 cents to $7.62.

Oil Search Limited traded flat at $6.03, Santos Limited fell 5 cents to $12.28 and Woodside Petroleum closed up 3 cents to $35.42.

Commonwealth Bank of Australia closed up $0.33 to $46.60 and National Australia Bank decreased 13 cents to $22.24. ANZ edged down 9 cents to $19.01. Westpac fell 8 cents to $19.75.

David Jones Limited closed down 16 cents to $2.81 and Wesfarmers Limited fell 18 cents to $31.36. Harvey Norman closed flat at $2.02.

David Jones said sales in fiscal first quarter declined 11.2% to $414.3 million and comparables sales in the quarter dropped 11% from a year ago.

The falling sales were flagged by the company earlier in September and the luxury retailer reaffirmed its first half profit decline between 15% and 20% from a year ago to $105.7 million.

Woolworths Limited closed up 21 cents to $24.56 and James Hardie Industries SE decreased 8 cents to $6.30.

Qantas Airways Ltd closed down 2 cents to $1.50, Virgin Australia fell 2 cent 34.5 cents but Flight Centre added 8 cents to $18.18.

BlueScope Steel Limited dropped 22 cents or 36% to 39 cents after the steel maker after the stock reopened on the company announcement that it will raise $600 million at 40 cents a share.

Investors were surprised that the share offering was needed to buttress the company finances and were generally expecting higher cash flow after the closure of two Port Kembla blast furnaces and cut steel production to 2.6 million tons.

The closure of furnaces resulted in $1 billion of write-off and the new share offering will allow the company to maintain its current debt at $900 million and trim the recent surge in the need for cash.