Second Weekly Decline in Iron Prices, Australian Stocks Falter

Marcus Jacob
30 May, 2014
New York City

Australian market indexes declined on Friday and for the week closed unchanged after spot iron ore prices traded below $100 per ton for the second week in a row. The RBA said total credit increased 0.5% in April. Lynas Corp completed $40 million stock offering.

[R]5:00 PM Sydney – Australian market indexes declined on Friday and for the week closed unchanged after spot iron ore prices traded below $100 per ton for the second week in a row. The RBA said total credit increased 0.5% in April. Lynas Corp completed $40 million stock offering.[/R]

Stocks in Sydney opened lower and struggled to reach flat line and in the final hour dropped further to close at the low of the day.

The persistent weakness in the iron ore prices and the general worries linked to stretched market valuation kept many investors on the side-line.

The Reserve Bank of Australia reported total credit in April rose 0.5% while personal credit was unchanged, business credit gained 0.3% and housing credit increased 0.6%.

Housing loans growth in April climbed to 6.1% from 4.5% increase in a year ago month but remained below the 2010 peak of 8.2%.

Australian dollar jumped to 93.15 U.S. cents and stock market trading turnover climbed to 1.05 billion shares worth $6.63 billion.

ASX 200 index fell 27 or 0.5% to 5,492.50 and the broader All Ordinaries slipped 25.40 to 5,473.80. For the week, ASX 200 edged down 0.01%.

Stocks in Review

Australand Property Group jumped 2.1% to $4.29 after the industrial property developer lifted its earnings per share forecast for the year between 20% and 25%, up from earlier estimate earnings growth of 17% to 20%.

Two days ago the company received a revised takeover bid from its rival Stockland Corp Ltd valued it A$2.5 billion.

Aurizon Holdings Ltd closed unchanged at $4.94 and the China-based Baosteel Resources Australia received no objections from the Foreign Investment Review Board for the proposed takeover of Aquila Resources Limited at $3.40 per share valued $1 billion.

Envestra Limited gained 1.1% to $1.37 after the natural gas distributor backed the cash takeover offer of $2.37 billion from Cheung Kong consortium.

Lynas Corporation Limited plunged 17.6% to 14 cents after the stock resumed from a trading halt. The rare earths producer raised $39.97 million with a discounted price of 11.3 cents per new share to boost its working capital.