Australian Markets Jump 2% After Fed Announcement

Marcus Jacob
19 Dec, 2013
New York City

Australian indexes soared more than 2% following the Fed announcement of a gradual reduction in its huge bond purchase program and clarity on low interest rates for two more years. Cove-More Group Limited, travel insurer priced its initial public offering at $2 a share.

[R]4:30 PM Sydney – Australian indexes soared more than 2% following the Fed announcement of a gradual reduction in its huge bond purchase program and clarity on low interest rates for two more years. Cove-More Group Limited, travel insurer priced its initial public offering at $2 a share.[/R]

Australian indexes soared after the U.S. Fed signaled low interest rates at least for two more years and announced a gradual pare back of its huge bond buying program.

The central bank said it will shave off its bond purchase program by $10 billion from January and end by the end of next year. Markets were relieved after the Fed offered a gradual reduction in its purchase and clarity on its interest rate outlook.

Australian dollar dropped to 88.44 U.S. cents. Stock trading turnover climbed to 959 million shares worth $6 billion.

The ASX 200 index climbed 106.10 or 2.1% to close at 5,202.20 and the broader All Ordinaries jumped 102.70 to 5,202.

Stocks in Review

Rio Tinto advanced $1.20 to $66.53. BHP jumped $1.01 to $36.80. Woodside Petroleum Limited climbed 65 cents to $37.95.

Westpac increased 75 cents to $31.37.

Caltex Australia Limited surged 13.1% to $19.12 after the oil marketer forecasted profit for the year to declined 30% and expects net operating profit before non-recurring items between $320 million and $340 million compared to $458 million a year ago.

For the year, the company forecasted operating loss in refining business to $175 million and operating profit from fuel marketing business jumped 4% to $765 million.

Caltex expects profit-after-tax for the year in the range of $540 million to $560 million compared to $57 million a year ago.

Monadelphous Group Limited climbed 2.9% to $18 after the diversified engineering company won extensions of contract for the work in oil and gas sector across Papua New Guinea and the Northern Territory for $100 million.

Salmat Limited closed unchanged at $2.12 after the communications and marketing services provider signed a deal to buy a Philippines-based outsource service provider MicroSourcing International worth $31 million.

Ten Network Holdings Ltd jumped 3.6% to 28.5 cents after the media company regained the rights to telecast the V8 supercars in a deal worth $241 million, together with Foxtel and Fox Sports.

Watpac Limited rose 0.6% to 89 cents after the property developer secured contract from Charter Hall Group to demolish and redevelop 17-storey office retail building in the middle of Sydney. The contract is valued at $72 million.