Australia Holds Surplus Outlook; GrainCorp, Virgin, Newcrest in Focus

Marcus Jacob
28 Aug, 2012
New York City

Defensive sector stocks in Sydney closed higher as investors focused on utilities, banks and pharmaceutical companies. Global economic backdrop weakened after Japan lowered its assessment. Treasurer Swan held his surplus target and outlook.

[R]7:30 PM Sydney – Defensive sector stocks in Sydney closed higher as investors focused on utilities, banks and pharmaceutical companies. Global economic backdrop weakened after Japan lowered its assessment. Treasurer Swan held his surplus target and outlook.[/R]

Australian stocks closed higher after investors returned to increase exposure to domestic defensive sector stocks.

The Treasurer Wayne Swan told reporters at a gathering in Sydney that the government is still on track to deliver a budget surplus despite the recent commodities price slump.

However, Swan agreed that the latest spot price fall in iron price of more than 20% was deeper than expected by the government but the prices may rebound and the government is prepared to cut expenses if necessary.

The budget in May had estimated a decline of 5.75% in terms of trade prices but the actual decline in the year so far is not available.

The ASX 200 index increased 15.70 to 4,359.40 and the broader All Ordinaries gained 14.04 to 4,386.95.

The Australian dollar decreased to US$1.037 from US$1.04 after the latest data on Chinese companies profit in July.

Stock Movers

GrainCorp was in a trading halt at $9.85 and said it has agred to acquire two food oil businesses for $472 million from Goodman Fielder and form GrainCorp Oils.

BHP Billiton Limited increased 8 cents to $33.10 and, Rio Tinto Limited declined 36 cents to $51.75 and Fortescue Metals Group slipped 10 cents to $3.90.

Iluka Resources gained 8 cents $10.01 and Lynas Corporation Limited closed unchanged at 66 cents.

Newcrest Mining dropped 52 cents to $26.70 and the gold miner said it has halted production at its Lihir mines in Papua New Guinea after a dispute with local landowners.

Kingsgate declined 21 cents to $4.99 and Whitehaven Coal increased 8 cents to $3.36.

The engineering contractor, Monadelphous Group added 3 cents to $22.04.

Oil Search Limited up 1 cent to $7.42 and Santos Limited gained 6 cents to $11.53 and Woodside Petroleum decreased 5 cents to $34.65. Sundance Energy slid 2.5 cents to 71 cents.

Seven West Media closed unchanged at $1.49, Ten Network closed down 2.5 cents to 38.5 cents and Fairfax Media closed unchanged at 45 cents.

Consolidated Media Holdings slid 2 cents to $3.44 after it reported 15.6% decline in net profit.

Metcash up 3 cents to $3.63, Harvey Norman Holdings added 3 cents at $2.15 and Woolworths gained 21 cents to $28.94. Kathmandu closed up 2 cents at $1.38.

Commonwealth Bank of Australia declined 23 cents to $54.41 and Bank of Queensland grew 4 cents to $7.57. ANZ climbed 24 cents to $24.94. National Australia Bank advanced 25 cents at $25.25 and Westpac Banking Corporation increased 19 cents to $24.87.

Macquarie Group jumped 44 cents to $26.71 and Perpetual Limited gained 6 cents to $27.31.

David Jones Limited closed unchanged at $2.44 and Wesfarmers increased 20 cents to $34.30. Billabong International Limited closed unchanged at $1.36. Breville Group slid 4 cents to $5.45. Harvey Norman added 3 cents to $2.15.

Toll Holdings closed unchanged at $4.51, Leighton gained 2 cents to $17.05 and property developer Mirvac Group up 1 cent to $1.34.

Aristocrat Leisure, the gambling machines maker, increased 7% to $2.76 after it said first half net profit surged 40% to $34.7 million.

Qantas added 1 cent to $1.19 and Flight Centre increased 10 cents to $23.70 and Virgin Australia closed unchanged at 48 cents after it said it will increase domestic capacity and returned to fiscal year profitability with net income of $22.8 million.

QR National increased 7 cents to $3.60 and Telstra gained 3 cents to $3.76.