China Growth Worries Drag Australian Stocks Lower, Newcrest Lifts Outlook

Marcus Jacob
23 Jan, 2014
New York City

Australian dollar and Asian stocks declined 1% after a private survey indicated a slowdown in manufacturing in China. Saputo is close to acquiring WCB after a 17.7% minority stake holder agreed to sell its stake. Newcrest boosted its 2014 outlook and said all six mines are operating at a profit.

[R]4:30 PM Sydney – Australian dollar and Asian stocks declined 1% after a private survey indicated a slowdown in manufacturing in China. Saputo is close to acquiring WCB after a 17.7% minority stake holder agreed to sell its stake. Newcrest boosted its 2014 outlook and said all six mines are operating at a profit.[/R]

Stocks in Australia fell sharply after a private survey estimated a decline in growth in manufacturing in China. The estimate is preliminary but offers another evidence of economic slowdown in China.

The government estimate of manufacturing industry growth is scheduled two weeks and the government survey is based on a larger sample of companies and is heavily weighted in state controlled enterprises.

The Purchasing Manager’s Index declined to 49.6 in January from 50.5 in December, HSBC and Markit reported the data.

Chinese government has been engineering economic slowdown for the last two years and China confirmed on Monday that the economic growth has slowed to a 14-year low in the final quarter of 2013, still healthy growth rate above 7%.

Australian dollar fell to 88.05 U.S. cents after the release of inflation data and in stock trading turnover gained to 709 million shares worth $4.4 billion.

The ASX 200 index dropped 56.80 or 1.1% to close at 5,263 and the broader All Ordinaries slumped 55.80 to 5,275.50.

Stocks in Review

Rio Tinto declined 62 cent to $64.67, BHP slipped 59 cents to $37.04 and Woodside Petroleum Limited fell 13 cents to $38.02.

Westpac slumped 51 cents to $31.44.

Murray Goulburn Co-operative Co. Limited, the Australia-based private dairy withdrew its offer for Warrnambool Cheese & Butter Factory Co and sell its stake of 17.7% to rival suitor Canada based Saputo.

Saputo has accumulated 75% stake in the company.

Newcrest Mining Limited dropped 2.2% to $9.13 after the Australia-based precious metals miner said gold production in the quarter jumped 26% to 621,125 ounces from 492,906 ounces a year ago and 6% higher than the previous quarter.

The increase in production was driven by 27% rise in production at Telfer mine with copper production of 22,603 tons.

Insurance Australia Group Limited slumped 2.9% to $5.60 after the general insurance services provider lifted its guidance for the insurance margin of 13.5% in the first-half and gross insurance margin between 14.5% and 16.5% in the year to June.

Chief executive Mike Wilkins said “we expect to record strong first half underlying performance.”

The group expects to grow gross written premiums in the range of 3% to 5% lower from 5% to 7% estimated earlier.

Santos Limited fell 0.8% to $14.14 after the oil and gas producer reported revenue in the fourth-quarter ending in December soared 21% to record $1.1 billion.