Weak Australian GDP Drags Indexes and Dollar

Marcus Jacob
07 Mar, 2012
New York City

The benchmark index in Australia declined the most in the year so far and registered the worst one day loss in nine weeks after economic growth in the final quarter was less than expected. The Australian dollar fell against all major currencies.

[R]8:00 PM Sydney – The benchmark index in Australia declined the most in the year so far and registered the worst one day loss in nine weeks after economic growth in the final quarter was less than expected. The Australian dollar fell against all major currencies.[/R]

Australian economic growth in December quarter slowed and the 2011 growth was the slowest since 2008.

In the December quarter, the economy expanded at 0.4% from the third quarter ending in September when the economic growth was revised to 0.8%, according to the latest data released by the Australian Bureau of Statistics.

For the 2011, the economy expanded at 2.3%, slowest pace since 2008 and below the average growth of rate 3.3% since 1997.

The latest highlighted that economic vulnerabilities and the resources exports continue to drive the overall economy. However, the boom in the mining sector is filtering to the broader economy and the housing market and retail consumption continue to lag the overall advance in the economy.

In the last quarter, weakness in business investment cut the GDP growth by 0.2 percentage points and housing market weakness also shaved the growth by the same amount. However, international trade added 0.3 percentage point to the quarterly growth and retail sales indicating final consumption also lifted the growth by the similar amount.

The ASX 200 index fell 61 to 4,143.7 and All Ordinaries index declined 61.1 to 4,234.4.

The Australian dollar edged lower to close at $1.0534 and fell to 85 yen and to 80.19 euro cents.

Stock Movers

BHP Billiton Ltd decreased 53 cents to $34.05, Rio Tinto Ltd fell $1.20 to $62.42 and Fortescue Metals Group decreased 22 cents to $5.51.

Lynas Corporation Limited fell 2 cents to $1.10 and Iluka Resources closed down 48 cents to $16.00. Newcrest Mining decreased $1.22 to $30.60 after gold prices declined in international markets.

Gloucester Coal decreased 15 cents to $8 after the company recommended merger with China controlled Yancoal Australia.

Kagara plunged 39% or 12 cents to 19 cents after the company lowered its production estimate of zinc and copper and began trading on the first day after it agreed to sell its nickel deposit in Western Australia to Western Areas.

Oil Search Limited decreased 17 cents to $6.92, Santos Limited rose 9 cents at $13.60 and Woodside Petroleum unchanged to $35.04.

Telstra decreased 2 cents lower to 3.23 after the company agreed to participate in the rollout of the national broadband network after it wrapped up its $11 billion agreement with NBN and the federal government.

Commonwealth Bank of Australia decreased 92 cents to $47.66, Westpac closed down 26 cents to $20.30 and NAB decreased 41 cents to $23.07. ANZ decreased 34 cents to $21.75.

Amcor increased 10 cents to $6.90 after the packaging company agreed to acquire Aperio Group for $238 million.

David Jones Limited decreased 8 cents to $2.60 and Harvey Norman Holdings closed fell 4 cents to $1.92. Woolworths gained 11 cents to $25.15.

Qantas Airways Ltd closed fell 4 cents to $1.72, Virgin Australia closed down 0.5 cent to 44 cents and Flight Centre decreased 67 cents to $21.24.

QR National closed down 11 cents to $3.76.