Australia Lowers Growth Outlook, Rio Tinto Approves $5.5 Billion Expansion

Marcus Jacob
09 Aug, 2013
New York City

Australian market indexes struggled and Reserve Bank of Australia lowered its economic outlook to 2.25%. Australian dollar gained above 91.40 U.S. cents. Rio Tinto said it plans to go ahead with its $5.5 billion expansion at its Australian iron ore mines.

[R]4:45 PM Sydney – Australian market indexes struggled and Reserve Bank of Australia lowered its economic outlook to 2.25%. Australian dollar gained above 91.40 U.S. cents. Rio Tinto said it plans to go ahead with its $5.5 billion expansion at its Australian iron ore mines.[/R]

Stocks in Sydney traded lower in the first one hour of trading as market indexes gradually erased most of the losses but indexes failed to cross the flat line.

Australian dollar jumped to 91.44 U.S. cents and in stock trading turnover dropped to 679 million shares worth $3.8 billion.

The ASX 200 index fell 14.60 to close at 5,050.20 and the broader All Ordinaries slid 8.30 to 5,038.80. For the week, ASX 200 dropped 1.2%.

The economic growth concerns weighed on the market after the Reserve Bank of Australia lowered its outlook.

In its quarterly monetary policy update, the central bank lowered economic growth outlook to 2.25% from 2.5% estimated three months ago.

Separately, slightly positive outlook on Chinese inflation also helped market to recoup some of the losses.

National Bureau of Statistics in China said consumer price inflation index was flat in July at 2.7% and producer price index declined for the 17th month in a row to 2.3% from 2.7% in June.

Stocks in Review

Rio Tinto climbed 77 cents to $60.25 and chief executive officer Sam Walsh said it would be interested in blocks one and two Simandou’s iron ore deposit of Guinea, if they agree for sale.

Separately, Rio said it will proceed with its $5.5 billion expansion of its iron ore mines in Australia.

BHP jumped 63 cents to $35.94 and Woodside Petroleum Limited up 11 cents to $38.37.

David Jones Limited slid 8 cents to $2.61 and Breville Group fell 9 cents to $7.37. Woolworths dropped 26 cents to $32.80.

Mirvac Group closed unchanged at $1.65 and Lend Lease slipped 13 cents to $8.85.

Westpac decreased 14 cents to $30.77 and Commonwealth slid 0.2% to $73.85. National Australia Bank decreased 17 cents to $30.57.

British sports betting William Hill Plc today agreed to acquire Australian online betting firm Tom Waterhouse for up to $110 million including the debt. Gai Waterhouse and bookie Robbie Waterhouse want to sell only 50% of the business for $110 million.

FKP Property Group declined 3.3 to $1.45 after the property investment company will take a $187.9 million impairment charge and said valuation of its Australian retirement assets remained unchanged.

News Corporation slid 0.06% to $17.84 and the chief executive officer of the Australian media unit Kim Williams has stepped down and will be replaced by Julian Clarke from August 12.

Tabcorp Holdings Limited dropped 2.7% to $3.27 after the leisure and entertainment service provider said total revenue in the year ending in June declined 30% to $2.13 billion from $3.04 billion a year earlier. Net profit plummeted 63% to $126.6 million compared to $340 million a year ago.

The company wrote off $47.2 million of goodwill on its now decommissioned Victorian Tabaret Gaming business and impairment charge for its Victorian Keno license of $18.6 million.

Retail Food Group Limited fell 0.9% to $4.15 and the franchisor of Brumby estimated net profit for the year to increase 13% to $30.3 million.