Australian Fiscal Deficit Below Estimates, Weak Resource Stocks

Marcus Jacob
24 Sep, 2012
New York City

Australian markets and dollar were on the defensive and the government reported smaller than expected final fiscal year budget deficit in the previous year. Resource stocks were on the decline after commodities prices fell in local trading.

[R]7:30 PM Sydney – Australian markets and dollar were on the defensive and the government reported smaller than expected final fiscal year budget deficit in the previous year. Resource stocks were on the decline after commodities prices fell in local trading.[/R]

Australian markets were on the defensive tracking the weak closing on Friday in New York and in Europe.

Commodities prices were on the decline as the attention in the euro zone crisis shifted to Spain and French budgets and the lack of urgency on the part of Germany to establish single supervisory banking authority in the region under the European Central Bank.

The ASX 200 index slipped 22.80 or 0.5% to 4,385.50 and the broader All Ordinaries decreased 21.56 to 4,409.17.

Australian dollar decreased 1 cent to close at $1.036 against the U.S. dollar. Spot gold in local trading declined 0.7% or more than $11 to close at US$1,761.

Treasurer Wayne Swan said that the final fiscal year 2011-2012 was $43.7 billion, lower than the previous estimate of $44.4 billion estimated in May and sharply below the $47.7 billion in the previous fiscal year ending in 2011.

The total budget deficit was 3% of gross domestic product and was lower than anticipated on lower cash payments of $305 million and higher cash receipts of $356 million.

Swan also reiterated government’s commitment to deliver a surplus in the current fiscal year ending in 2013 despite the decline in commodities prices.

Stock Movers

Resource sector stocks were in focus after energy and metals prices were on the decline in Monday’s trading.

BHP Billiton Limited slumped 29 cents to $33.41 and, Rio Tinto Limited declined $1.36 to $54.97.

Rio said it plans to cut jobs at its majority controlled Coal & Allied Industries where it employs 1,500 staff at three locations. Coal prices have fallen 20% in the last three months and high Australian dollar has impacted company margins.

Lynas Corporation Limited slid 1 cent to 86.5 cents and Iluka Resources dropped 31 cents to $10.61.

Fortescue Metals fell 1 cent to $3.60. Mirabela Nickel slipped 2.5% to 38.5 cents.

Newcrest Mining plummeted 76 cents to $28.14 after the stock traded ex-dividend and the gold miner said last week that its mines are operating at 25% capacity in Papua New Guinea on inconsistent power supply and availability.

Kingsgate decreased 7 cents to $6.02 and Whitehaven Coal slumped 7 cents to $2.92.

Transfield Services lowered 1 cent to $1.78; engineering contractors WorleyParsons decreased 6 cents to $27.54 and Monadelphous Group dropped 20 cents to $19.60.

Oil Search Limited down 8 cents to $7.49 and Santos Limited slid 4 cents to $11.45 and Woodside Petroleum slumped 15 cents to $34. Sundance Energy gained 3.5 cent or 4.7% to 78 cents.

Origin Energy declined 27 cents to $11.27 after its chief Grant King forecasted natural gas demand in Eastern Australia to triple in the next five years. Origin is also exploring for energy in New Zealand, South East Asia, Kenya and Botswana.

Seven West Media slid 2 cents to $1.25, Ten Network closed unchanged at 37 cents and Fairfax Media down 1 cent to 45.5 cents and the controversial News Corp. dropped 15 cents to $24.01.

Harvey Norman Holdings closed unchanged at $1.95, Woolworths lowered 3 cents to $29.24 and Kathmandu closed unchanged at $1.30.

David Jones Limited slid 2 cents to $2.36 and Wesfarmers slumped 16 cents to $34.59. Breville Group added 2 cents to $5.32.

Billabong International Limited lowered 3 cents to $1.33.

Commonwealth Bank of Australia decreased 7 cents to $55.08 and Bank of Queensland slipped 4 cents to $7.69. ANZ declined 14 cents to $24.70.

National Australia Bank climbed 10 cents to $25.50 and Westpac Banking Corporation slid 4 cents to $24.58.

Macquarie Group slumped 6 cents to $29 and Perpetual Limited gained 4 cents to $26.79.

Toll Holdings down 4 cents to $4.41, Leighton slipped 7 cents to $16.48 and property developer Mirvac Group up 1 cent to $1.41.

Qantas slid 2 cent to $1.24, Flight Centre added 3 cents to $23.55 and Virgin Australia slipped 1 cent to 41.5 cents and opposed the recent alliance between Qantas and Emirates. Virgin said any benefits to consumers will be overshadowed by the dominance of two airlines on key routes.

QR National lowered 1 cent to $3.39 and Telstra down 1 cent to $3.86.