Australia Lowers Economic and Fiscal Outlook, Stocks Fall

Marcus Jacob
22 Oct, 2012
New York City

Australian stocks turned lower from a new 15-month high on the weakness in resource sector. Australian government lowered its estimate of surplus and mining industry tax receipts over next four years.

[R]7:30 PM Sydney – Australian stocks turned lower from a new 15-month high on the weakness in resource sector. Australian government lowered its estimate of surplus and mining industry tax receipts over next four years.[/R]

Stocks in Australian traded lower tracking weak market sentiment in New York and European region after several tech companies reported weaker than expected earnings results.

The mood was cautious in trading today and resource sector stocks lead the markets lower but banks held up.

The ASX 200 index slumped 30.10 or 0.7% to 4,541 and the broader All Ordinaries declined 28.87 to 4,564.59.

Australian dollar decreased 1 cent to close at $1.0323 against the U.S. dollar.

Australian government lowered its revenues and surplus outlook in mid-year economic and fiscal outlook. The government cut its surplus target to $1.1 billion from $1.5 billion estimate in May on the decline in mining tax receipts to $9.1 billion from the $13.4 billion projection over the next four years.

The government lowered its economic growth forecast to 3% from 3.25% in May on the falling commodities tax receipts and struggling exports to China and European Union.

Japanese exports dropped 10.3% in the year to September, the sharpest decline since the 2011 earthquake and tsunami. In addition, the Bank of Japan lowered its regional economic outlook.

Japanese exports have been falling for four months in a row as the dispute with China knocks off demand and auto, electronics and general machinery makers suffer decline in sales. Exports in the coming months are likely to weaken further as the boycott of Japanese products filters through other industries.

Exports to China dropped 14.1% and to European Union plunged 21.1% in the year to the month.

The sentiment among manufacturers in a regional survey declined to minus 17, a decline of 12 points, and the lowest since January 2010.

Stock Movers

BHP Billiton Limited slumped 30 cents to $34.70 and, Rio Tinto Limited dropped $1.40 to $57.75. Lynas Corporation Limited slid 0.5 cents to 68 cents and Iluka Resources declined 35 cents to $10.46.

Fortescue Metals decreased 9 cents to $4.14.

Mirabela Nickel slipped 2.1% to 47 cents and Newcrest Mining dropped 37 cents to $27.14. Kingsgate decreased 13 cents to $5.68 and Whitehaven Coal slipped 9 cents to $3.15.

Graincorp soared 41% to $12.50 after the company confirmed that it received a preliminary bid of $2.7 billion from the U.S. based Archer Daniels Midland which controls 14.9% stake in the company.

Treasury Wine Estates dropped 5.5% or 30 cents to $5.20 after the winemaker said in a regulatory filing full-year earnings after tax and before one-time charges of $135.5 million. The company also estimated lower growth in constant currency in the current year compared to the average of past two years.

Transfield Services slid 1 cent to $1.64; engineering contractors WorleyParsons declined 41 cents to $26.99 and Monadelphous Group slipped 8 cents to $21.55.

Oil Search Limited decreased 5 cents to $7.60 and Santos Limited slumped 5 cents to $11.94 and Woodside Petroleum dropped 37 cents to $35.61. Sundance Energy added 1 cent to 78.5 cents.

Origin Energy Limited increased 7 cents to $11.65.

Seven West Media slid 1 cent to $1.23, Ten Network gained 2 cents to 30 cents and Fairfax Media added 0.5 cents to 36.5 cents and the controversial News Corp. plummeted 43 cents to $24.50.

Harvey Norman Holdings closed unchanged at $2.01, Woolworths slumped 25 cents to $29.21 and Kathmandu added 2 cents to $1.52.

David Jones Limited up 1 cent to $2.62 and Wesfarmers decreased 24 cents to $34.88. Breville Group gained 3 cents to $6.20.

Billabong International Limited slid 2 cents to 83 cents.

Commonwealth Bank of Australia slipped 17 cents to $56.67 and Bank of Queensland increased 10 cents to $7.48. ANZ closed unchanged at $25.66.

National Australia Bank slipped 20 cents to $26.02 and Westpac Banking Corporation dropped 18 cents to $25.38.

NAB said fourth quarter cash earnings are expected to be flat at $1.4 billion and full year profit is expected to be $5.63 billion compared to $5.5 billion a year ago.

Macquarie Group dropped 31 cents to $31 and Perpetual Limited slumped 28 cent to $27.73.

Toll Holdings added 2 cents to $4.39 and Leighton decreased 6 cents to $19.06 and property developer Mirvac Group closed unchanged at $1.51.

Qantas down 1 cent to $1.33, Flight Centre increased 20 cents to $27.20 and Virgin Australia added 0.5 cents to 45 cents.

QR National slid 2 cents to $3.80 and Telstra slipped 4 cents to $4.03.