Weak Resource Stocks Lead Australian Markets Lower

Marcus Jacob
22 Jun, 2012
New York City

Australian stocks tracked lower world markets after resources prices on the rising worries of the economic slowdown. Crude oil, copper and gold fell more than 3% and bank worries rose after another round of downgrade of European and American banks.

[R]8:00 PM Sydney – Australian stocks tracked lower world markets after resources prices on the rising worries of the economic slowdown. Crude oil, copper and gold fell more than 3% and bank worries rose after another round of downgrade of European and American banks.[/R]

Australian indexes declined 1% for the second day in a row as commodities prices fell and global economic slowdown worries intensified.

Resource stocks fell for the third day in a row as crude oil prices fell 3% and gold and copper eased 3.5% in international trading. Crude oil has fallen 21% in the year so far and gold is up 1% in the year.

Investors also paid attention to the latest rating downgrade from Moody’s Investors Service of 15 large banks in the U.S. with global operations. The latest downgrade, though construed as a late action by most analysts highlighted the persistent risks in the banking industry and the lack of transparency in nature of assets and the reliance on short term financing.

The ASX 200 index dropped 39.40 to 4,048.20 and All Ordinaries index slumped 39.87 to 4,093.80. For the week, the ASX 200 index closed nearly unchanged after volatile trading and back-to-back 1% decline in the last two sessions.

The Australian dollar decreased for the second day to US$1.004 but still traded above the parity with the U.S. dollar for the sixth day in a row.

In trading, stock turnover decreased to 1.7 billion worth $3.6 billion with 266 stocks trading higher, 717 declining and 380 were unchanged.

Stock Movers

Consolidated Media fell 3 cents to $3.37 after News Corp announced takeover proposal for $2 billion and buy the rest of the 50% of the company it does not own.

News Corp, the controversial media conglomerate with aggressive tactics increased 14 cents to $20.33 and Ten Network decreased 1.5 cent to 51 cents.

Acrux, a drug maker rebounded on the second day by 4.9% to $4.27 a day after the company said it faced more questions for its patent application from the U.S. agency.

BHP Billiton Limited declined 68 cents to $31.52 and Rio Tinto Limited dropped 88 cents to $56.02. Fortescue Metals Group gained 12 cents to $4.91.

BHP Billiton said that its board approved the investment of $845 million to sustain operations at Illawarra Coal in southern New South Wales by establishing a replacement mining area at the Appin Mine. The replacement area will have an annual production capacity of 3.5 million tons and will sustain coal production at Illawarra at 9 million tons and will be fully operational by 2016.

Lynas Corporation Limited unchanged to 94.5 cents and Iluka Resources declined 42 cents to $11.38. Newcrest Mining slumped 70 cents to $23.05 and Kingsgate decreased 22 cents to $5.16.

Oil Search Limited slid 23 cents to $6.36 and Santos Limited shrink 25 cents to $11.32 and Orica fell 5 cents to $23.72.

David Jones Limited rose 2 cents to $2.28, Harvey Norman Holdings fell 1 cent to $1.87 and Woolworths added 3 cents to $26.38. Kathmandu was unchanged to $1.12.

Billabong was in a trading halt and the struggling retailer of surfwear launched a public offer to raise $225 million at 44% discount to its last traded price of $1.83. The public offer price is $1.02.

Myer fell 2.9% to a record low of $1.64 and a day ago chief executive Bernie Brookes reaffirmed the earnings fall in the current year of 15%.

Commonwealth Bank of Australia declined 9 cents to $51.69 and Bank of Queensland slipped 18 cent to $6.54. ANZ slumped 30 cents to $21.28. National Australia Bank rose 3 cents to $23.17 and Westpac Banking Corporation dropped 23 cents to $20.75. Macquarie Group increased 7 cents to $25.57.

Perpetual Limited shrink 35 cents to $23.34 as speculators expect another bid for the company at a higher price.

Stockland gained 4 cents to $3.29, Leighton closed down at 48 cents to $16.69 and Toll Holdings decreased 6 cents to $4.04.

Qantas fell 2 cents to $1.12 as airline executives mounted a campaign in Canberra and said that the company many go under if UAE based Etihad was allowed to increase ints stake in Virgin Australia.

Virgin Australia slid 1.5 cents at 37.5 cents and Flight Centre declined 68 cents to $18.62.

QR National fell 1 cent to $3.37.