Rate Lowered in Australia, Qantas Estimates Net to Fall 91%

Marcus Jacob
05 Jun, 2012
New York City

Australian stocks rebounded after the Reserve Bank of Australia lowered cash rate by 25 basis points in a preemptive move as financial markets sentiment deteriorated in the last eight weeks. Qantas plunged 18% after it estimated its full year net profit to plunge 91% from a year ago.

[R]8:00 PM Sydney – Australian stocks rebounded after the Reserve Bank of Australia lowered cash rate by 25 basis points in a preemptive move as financial markets sentiment deteriorated in the last eight weeks. Qantas plunged 18% after it estimated its full year net profit to plunge 91% from a year ago.[/R]

Stocks in Australia rebounded after the Reserve Bank lowered its cash rate by 25 basis points.

If banks pass the lowered rate to consumers, the average standard variable rate across four largest banks will fall below record low of 7.5% to 6.8%. The statement released after the rate setting board noted the recent deterioration in the financial market sentiment but highlighted that global markets are still functioning well for large corporations and banks.

The ASX 200 index increased 58.70 or 1.5% to 4,043.70 and All Ordinaries index gained 58.97 or 1.5% to 4,092.37. Qantas dived to a record low after it estimated 91% plunge in full year profit.

The Australian dollar traded near the low of the year but rebounded to 97.80 U.S. cents.

Stock Movers

David Jones Limited fell 1 cent to $2.12, Harvey Norman Holdings closed unchanged to $1.88 and Woolworths dropped 21 cents to $26.32.

Kathmandu unchanged to $1.05. Billabong International Limited increased 6 cents to $1.86.

BHP Billiton Ltd advanced 41 cents to $31.16 and Rio Tinto Ltd gained 85 cents to $53.75. Fortescue Metals Group increased 20 cents to $4.55.

Lynas Corporation Limited added 4 cent to $1.01 and Iluka Resources surged 80 cents 6.7% to $12.68. Newcrest Mining advanced 53 cents to $25.06 and Kingsgate gained 31 cents to $5.65.

Gloucester Coal increased 7 cents to $6.82 after the company approved the merger with China based Yancoal Australia.

Oil Search Limited rose 8 cents to $6.54 and Santos Limited advanced 42 cents to $11.64 and Orica gained 17 cents to $23.83.

Commonwealth Bank of Australia added 90 cents to $50.0 and Bank of Queensland increased 22 cents to $6.55. ANZ advanced 45 cents to $21.32. National Australia Bank gained 52 cents to $22.55 and Westpac Banking Corporation closed up at 39 cents to $20.59.

Stockland fell 2 cents to $3.15, Leighton increased 26 cents to $16.83 and Toll Holdings closed up at 7 cents to $4.42.

Qantas tumbled 26 cents or 18.7% to $1.15 after the airline estimated full-year net is to be expected to decline 91% and the company blamed soaring fuel costs and on the euro zone turmoil.

Chief executive Alan Joyce said that the international operation is struggling and the operating loss in the division is expected to exceed $450 million and domestic operation is expected earn operating profit of more than $600 million.

Qantas estimated full year net profit to be between $50 million and $100 million compared to $552 million a year ago.

Virgin Australia rose 1 cent to 42 cents and Flight Centre gained 63 cents to $17.66.

QR National increased 16 cents to $3.47.