Australian Stocks Rebound; Qantas Estimated Net Drop of 66%

Marcus Jacob
28 Nov, 2011
New York City

Australian stocks closed higher after the U.S. holiday sales showed a marked increase from a year ago. Markets in Asia and commodities rose. Qantas Airways Limited estimated first half profit to decline 66% on higher fuel and workers strike.

[R]9:00 PM Sydney – Australian stocks closed higher after the U.S. holiday sales showed a marked increase from a year ago. Markets in Asia and commodities rose. Qantas Airways Limited estimated first half profit to decline 66% on higher fuel and workers strike.[/R]

Australian stocks rebounded on the hopes that European leaders will find a solution to growing debt contagion but two reports indicated growing anxieties in the region.

The ASX 200 index added 73.9 or 1.9% to 4,058.20 and All Ordinaries index gained 1.7% or 68.2 to 4,125.80.

The Australian dollar rose 1.4% to US$0.995.

The Organization for Economic Cooperation and Development lowered its global growth outlook. The Paris based research organization said global growth will ease to 3.4% in 2012 from 3.8% in the current year.

In May, the O.E.C.D had projected 4.2% growth this year and 4.6% for 2012.

Euro area growth is forecast to slow down from 1.6% this year to 0.2% next year, rising to 1.4% in 2013.

The Paris based research group also warned that the problems that started in Greece almost two years ago are likely to spread to larger and more diversified economies that would “massively escalate economic disruption.”

O.E.C.D.’s chief economists Pier Carlo Padoan said, “Policy-makers fail to see the urgency of taking decisive actions to tackle real and growing risks to the global economy.”

Stock Movers

BHP Billiton Ltd added 80 cents to $34.85 and Rio Tinto Ltd gained $1.32 to $62.27. Newcrest Mining increased $1.08 to $34.50.

BHP Billiton Ltd. said its Group Executive and Chief Financial Officer Alex Vanselow would retire from the company at the end of February 2012 and succeeded by Graham Kerr, President of Diamonds and Specialty Products.

Fortescue Metals Group increased 19 cents to $4.70, Lynas Corporation Limited increased 7 cents to $1.17 and Iluka Resources fell $0.29 to $14.53.

Uranium miner Paladin Energy rose 4 cents to $1.45 and Peninsula Energy Ltd closed down 0.2 cent to 3.6 cents. Extract Resources increased 18 cents to $7.83.

Oil Search Limited traded up 19 cents to $6.09, Santos Limited gained 33 cents to $12.66 and Woodside Petroleum closed down $0.76 cents to $32.60.

Commonwealth Bank of Australia closed up $1.30 to $46.89 and National Australia Bank increased 92 cents to $22.74. ANZ edged up 43 cents to $19.20. Westpac added 76 cents to $20.26.

David Jones Limited closed up 5 cents to $2.73 and Wesfarmers Limited added 2 cents to $30.68. Harvey Norman closed up 4 cents at $2.03.

Woolworths Limited closed down 2 cents to $24.21 and James Hardie Industries SE increased 16 cents to $6.42.

Qantas Airways Ltd closed up 5 cents to $1.50, Virgin Australia fell 0.5 cent 33.5 cents but Flight Centre added 22 cents to $18.50.

Qantas estimated first-half profit to decline as much as 66% on higher fuel costs and ongoing industrial disputes. Earnings in the first half were estimated between $140 million and $190 million.

Qantas earned $416 million in the first half last year. Fuel costs in the first half increased by $450 million to $2.2 billion. The company also failed to provide guidance for the current fiscal year and blamed it on the uncertain outlook and global economic conditions.

Qantas said total cost of the industrial disputes in the first half will increase to $194 million including the $27 million in the loss of forward booking, $29 million in customer recovery initiatives and $70 million from the 2-day grounding of its entire fleet late last month.

The airline also denied the news reports that it is looking to scrap its investment in a new hub in Asia and will instead do a code share with the national carrier of Malaysia.

QBE Insurance Group Limited increased 11 cents to $13.20.