Australian Index Gains 1.7%; Fortescue, Rio Tinto, Wesfarmers in Focus

Marcus Jacob
17 Jan, 2012
New York City

Australian indexes advanced after miners reported better than expected iron ore production in the December quarter. Investors bid up stocks after China reported economic growth of 8.9% in the fourth quarter and for the full year GDP expanded 9.2%.

[R]8:00 PM Sydney – Australian indexes advanced after miners reported better than expected iron ore production in the December quarter. Investors bid up stocks after China reported economic growth of 8.9% in the fourth quarter and for the full year GDP expanded 9.2%.[/R]

Australian stocks closed at a five-week high after China reported better than expected economic growth in the last quarter.

Market sentiment was also bolstered after Rio Tinto, Fortescue reported better than expected iron ore production and Wesfarmers reported a slight decline in coal production in the December quarter.

The ASX 200 index gained 68.4 or 1.7% to 4,215.6 and All Ordinaries index added 68.8 or 1.6% to 4,277.7.

The Australian dollar edged higher 0.1% and closed at US$1.035.

In trading, 1.59 billion shares changed hands worth $3.68 billion and 674 stocks increased, 264 decreased and 383 closed unchanged.

China’s GDP Expansion Continues

China reported economy expanded in the fourth quarter at 8.9% and rose 2% from the third quarter. The worries of slowdown in quarter were averted as urbanization continued despite the slowdown in exports to Europe and the U.S.

For the full year 2011, the GDP expanded by 9.2% after growing at 10.4% in 2010.

Economists are estimating the growth to slowdown in the current quarter to 7.5% compared to the increase of 9.7% in the quarter a year ago.

Stock Movers

BHP Billiton Ltd added 72 cents to $36.70 and Rio Tinto Ltd increased $0.81 to $65.70.

Rio Tinto said in the quarter to December, iron ore production increased to a record 65 million tons. For the full year its iron ore output increased to 245 million tons compared to its forecast of 240 million tons and the company reiterated its target of 283 million tons by the end of 2013.

Rio also said its bauxite production increased 7% but aluminum production gained 1% but alumina output declined 1%. Cocking coal production in Australia declined 2% and thermal coal output declined 3% on temporary shutdowns related to maintenance and equipment failures.

Wesfarmers increased 55 cents to $30.55 after it said its coal production declined 1.7% in December quarter from the previous quarter at its Curagh mine to 2.2 million tons.

Fortescue Metals Group increased 18 cents to $4.80 and the iron ore miner said it shipped 14.77 million tons of iron ore in the quarter to December and lowered its production cost.

Lynas Corporation Limited closed up 1 cent to $1.01 and Iluka Resources increased 32 cents to $16.28. Newcrest Mining added 43 cents to $32.41.

Oil Search Limited traded up 9 cent to $6.54, Santos Limited added 40 cents to $13.21 and Woodside Petroleum increased 64 cents to $33.65.

Commonwealth Bank of Australia increased 33 cents to $49.81, ANZ added 19 cents to $21.05, Westpac inched higher 29 cents to $20.66 and National Australia Bank gained 39 cents to $23.80.

David Jones Limited closed unchanged at $2.32 and Harvey Norman Holdings closed up 2 cents to $1.99.

Woolworths Limited closed up 12 cents to $25.57 and JB Hi-Fi Limited increased $0.25 to $12.00. Billabong International Ltd rose 1 cent to $1.82 and Kathmandu closed up 1 cent to $1.27.

Qantas Airways Ltd closed up 2 cent to $1.50, Virgin Australia closed unchanged at 30.5 cents and Flight Centre closed up 65 cents to $18.15.

QBE Insurance Group Limited increased $0.43 to $11.70 and Insurance Australia Group increased 5 cents to $2.98.

QR National rose 8 cents to $3.75.