Fortescue and Rio Tinto in Focus in Australian Trading

Marcus Jacob
16 Jul, 2014
New York City

Resource stocks in Australia traded higher after China reported better than expected economic growth in the second quarter. Fortescue Metals soared after iron ore shipments in the second quarter were ahead of estimates. Rio Tinto also reported better than expected iron ore production.

[R]5:00 PM Sydney, Australia – Resource stocks in Australia traded higher after China reported better than expected economic growth in the second quarter. Fortescue Metals soared after iron ore shipments in the second quarter were ahead of estimates. Rio Tinto also reported better than expected iron ore production.[/R]

Stocks in Sydney traded sideways and investors focused on international developments.

U.S. Federal Reserve Chair Janet Yellen comments to lawmakers were inconclusive and suggested that the central bank is in no hurry to increase rate in the near future. Yellen also stressed that the U.S. economy still needs monetary policy support.

In addition, China’s official estimate for the second quarter GDP growth was 7.5%, higher than expected 7.4% increase. The news lifted resource stocks.

The Australian Bureau of Statistics said new motor vehicle sales accelerated in June and jumped 1.7% compared to 0.4% increase in May.

Australian dollar declined and closed at 93.39 U.S. cents and stock trading turnover advanced to 658 million shares worth $3.83 billion.

ASX 200 index inched lower 1.20 to 5,510.10 and the broader All Ordinaries rose 8.80 to 5,504.50.

Stocks in Review

Fortescue Metals Group Limited soared 6.3% to $4.58 after the iron ore producer said shipments in the fiscal year ending in June jumped 53% to 124.2 million tons and for the fourth-quarter shipment surged 55% to 38.7 million tons.

Delivered cost to customers was US$49 per wet metric ton a reduction of 23% compared to a year ago and below the forecast.

As of June, the company said net debt was US$7.2 billion and cash on hand was US$2.4 billion.

Iluka Resources Limited climbed 3.9% to $8.53 after the zircon producer reported revenue in the first-half plunged 10% to $343 million from $382 million a year ago due to lower prices.
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The company added unit revenue per ton of zircon rutile sales fell to $1,015 compared to $1,178 a year earlier.

Leighton Holdings Limited rose 0.1% to $20.75 after the engineering construction company plans to divest its controlling stake of 50.6% in Queensland-based Devine Limited.

Rio Tinto Limited gained 1.3% to $63.94 after the miner said iron ore production in the first-half climbed 23% to 75.7 million tons on record production from the Pilbara mines.