Australian Terms of Trade Fall; Retailers Sales Drop in 2011

Marcus Jacob
20 Jan, 2012
New York City

Australian stocks traded higher and the benchmark index gained 1% in the week and closed up 4.5% in the year. Australian terms of trade declined from seven decade peak in the fourth quarter after a fall in prices of iron ore, cotton and cereals. Retailers suffered strong decline in sales in 2011.

[R]8:00 PM Sydney – Australian stocks traded higher and the benchmark index gained 1% in the week and closed up 4.5% in the year. Australian terms of traded declined from seven decade peak in the fourth quarter after a fall in prices of iron ore, cotton and cereals. Retailers suffered strong decline in sales in 2011.[/R]

Australian stocks closed higher following positive sentiment in international markets and export prices fell in fourth quarter of last year.

A private report suggested that retail sales at chain stores declined 9.3% in 2011 as consumers shift to online purchases and take advantage of strong dollar to buy goods from international retailers. Retail sales in December increased 0.2%.

The Commonwealth Bank business survey also showed that sales at retail stores declined 8.2% but at mail order catalogues increased 19.4% and clothing sales rose 10.8%.

The ASX 200 index closed up 24.4 or 0.6% to 4,239.6 and All Ordinaries index gained 24.4 or 0.6% to 4,303.

The Australian dollar edged higher 0.3% and closed at US$1.041 and 80.26 euro cents and 67.18 pence.

Australian Export Prices Fall in December Quarter

Export prices declined 1.5% in December quarter after rising 4% in the third quarter according to the data released by the Australian Bureau of Statistics. The terms of trade reached peak in the third quarter in the last 70 years based on the information collected from various government sources and compiled by ticker.com.

For the year, export prices rose solid 14% including the weak prices in the December quarter.

The export prices fell in the quarter after iron ore prices declined 4.5%, and 10.6% decrease in alumina and copper prices and cotton and textile prices eased 9.6%.

Import prices in the December quarter increased 2.5% and slowed from the 4% increase in the third quarter. For the year, import prices increased 4.7%.

Stock Movers

BHP Billiton Ltd added 14 cents to $37.48 and Rio Tinto Ltd increased $0.78 to $67.53.

Fortescue Metals Group increased 13 cent to $5.19, Lynas Corporation Limited closed up 13 cents to $1.28 and Iluka Resources increased $1.33 to $18.16. Newcrest Mining fell 26 cents to $32.44.

Oil Search Limited traded up 9 cents to $6.64, Santos Limited closed up 18 cents at $13.43 and Woodside Petroleum increased 51 cents to $33.99.

Hastings Diversified traded at $2.00 and the company rejected an offer from APA that valued the company at $2 a share based on its share price of $4.60. APA said the offer undervalues the pipeline company but did not offer an independent valuation.

Nexus Energy shot up 10% after the company confirmed that it will form a joint venture with Royal Dutch Shell and Osaka Gas to develop its Crux field in Browse Basin in Western Australia.

Commonwealth Bank of Australia increased 3 cents to $49.83 and ANZ increased 5 cents to $20.89 and Westpac inched higher 8 cents to $20.68. National Australia Bank closed flat at $23.88.

Westpac is planning to sell $20 billion of debt under its covered bond program following a similar announcement yesterday from National Australia Bank that priced 500 million pounds issue of covered bond program that matures in three years and with a floating rate yield of 145 basis points above the 3-month LIBOR rate.

David Jones Limited increased 2 cents to $2.38 and Wesfarmers Limited decreased 13 cent to $30.24. Harvey Norman Holdings closed up 1 cent $2.03.

Woolworths Limited closed down 23 cents to $24.90 and JB Hi-Fi Limited increased $0.29 to $11.98. Billabong International Ltd closed up 6 cents to $1.87 and Kathmandu closed down 1 cent to $1.24.

Qantas Airways Ltd rose 1 cent to $1.53, Virgin Australia fell 0.5 cent to 30.5 cents and Flight Centre added 30 cents to $18.85.

QR National fell 3 cents to $3.69.