Australian Business Investment Soars; Home Prices Fall

Marcus Jacob
30 Nov, 2011
New York City

Australian stocks edged higher and business investments surged at a record pace in sixteen years and mining companies race to complete $232 billion of projects. Home prices declined at a faster pace in Melbourne and Brisbane in October.

[R]8:00 PM Sydney – Australian stocks edged higher and business investments surged at a record pace in sixteen years and mining companies race to complete $232 billion of projects. Home prices declined at a faster pace in Melbourne and Brisbane in October.[/R]

Australian indexes extended gains for the third day in a row after business investment surged the most in 16 years in the last quarter. The surge in the mining investment accelerated as miners’ ramp up projects and race to complete $232 billion of multi-year projects.

The latest data released by the Australian Bureau of Statistics indicated business investment surged 12.3% in the third quarter to inflation adjusted $37.29 billion after revised increase of 6.2% in the second quarter.

The sharp upswing in the investment was driven by the surge of 22.1% from the second quarter and soared 80% from a year ago in mining investment to $17.2 billion.

Manufacturers also increased investment in the third quarter by 9.8% and 29% from a year ago. Companies also indicated that are likely to continue increase its investment in the current quarter and total for the year may jump 12% to $158 billion.

The ASX 200 index added 17.7 or 0.4% to 4,119.8 and All Ordinaries index gained 0.4% or 17.4 to 4,184.70.

The Australian dollar edged higher to US$1.009.

Australian home prices declined 0.5% in October across the nation after falling a revised 0.4% in September.

The latest data released by the RP Data-Rismark showed that the decline in seasonally adjusted home prices in September was twice the 0.2% fall previously estimated.

In the year to October, seasonally adjusted home prices in Melbourne declined 5.8% and in Brisbane fell 7.5% and decreased 1.4% in Sydney. Across the nation the prices are down 4% in the year so far.

The median home price in capital cities was averaged at $448,500.

Stock Movers

BHP Billiton Ltd fell 6 cents to $34.92 and Rio Tinto Ltd declined $0.55 to $62.95. Newcrest Mining decreased $0.47 to $34.60.

BHP Billiton also said it will review its diamond mining operations including its mines in Canada and may place it for sale after promoting the division to head to chief finance officer.

Aquila Resources gained 22 cents to $6.48 after it won a conditional federal government approval for its first iron ore mine.

Fortescue Metals Group decreased 11 cents to $4.54, Lynas Corporation Limited closed up 4 cents at $1.22 and Iluka Resources added $0.05 to $14.60.

Bradken gained 23 cents to $7.33 after the maker of capital equipment for miners said it completed the placement of US$200 million of debt financing and extend its debt maturity.

Oil Search Limited traded up 17 cents to $6.28, Santos Limited gained 26 cents to $13.08 and Woodside Petroleum closed up $0.55 cents to $32.80.

Asciano gained 5.5 cents to $1.525.

Commonwealth Bank of Australia closed up $0.03 to $47.40 and National Australia Bank increased 31 cents to $23.41. ANZ edged up 39 cents to $19.90. Westpac added 12 cents to $20.57.

David Jones Limited closed up 3 cents to $2.81 and Wesfarmers Limited fell 22 cents to $30.49. Harvey Norman closed up 5 cents at $2.10 and the retailer said it plans to accelerate its expansion to Asia.

Woolworths Limited closed up 14 cents to $24.62 and James Hardie Industries SE increased 7 cents to $6.70.

Metcash increased 6 cents to $4.03 after it won approval to acquire supermarket operator Franklins. The company also said its first-half profit declined 14% but raised its outlook for the full-year.

Qantas Airways Ltd closed unchanged at $1.51, Virgin Australia closed up 0.5 cent to 34 cents and Flight Centre fell 10 cents to $18.87.

QBE Insurance Group Limited increased 1 cent to $13.46.