Australia Halts 4-day Rally, Saudi Reaffirms Production Target

Marcus Jacob
23 Dec, 2014
New York City

Australian stocks halted a 4-day rally and resource and bank stocks led the decline. Investors also pushed oil lower after Saudi Arabia reaffirmed its commitment to maintain production level even if oil drops to $20 a barrel.

[R]5:30 PM Sydney – Australian stocks halted a 4-day rally and resource and bank stocks led the decline. Investors also pushed oil lower after Saudi Arabia reaffirmed its commitment to maintain production level even if oil drops to $20 a barrel.[/R]

Australian stocks halted a four-day rally that led to the surge of indexes by 5.5% after resource companies closed down.

In thin trading, stocks and indexes fell on the weakness in banks and resource stocks despite international markets closing higher.

However, investors focused on recent statements from Saudi Arabia and United Arab Emirates. Both oil producing nations reaffirmed the Organisation of Petroleum Exporting Countries to maintain oil production despite the current market glut.

Ali Al-Naimi, Saudi Arabia’s Oil Minister refused to slowdown oil supply even if oil sank to US$20 a barrel.

Australian dollar closed at 81.19 U.S. cents and in stock-trading turnover declined to 814 million shares worth $4.4 billion.

ASX 200 Index dropped 61.10 or 1.1% to 5,380.90 and broader All Ordinaries Index fell 57.70 or 1.1% to 5,356.40.

In commodities trading, gold plunged to US$18 US$1,180 an ounce and light crude oil declined $1.87 to US$55.26 a barrel. Brent Crude declined 47 cents to close at US$60.11 a barrel.

Australian Stock Movers

Beacon Lighting Group Ltd surged 16.7% to $1.40 after the ceiling fans and lighting retailer forecasted earnings before interest, tax, depreciation and amortisation for the first-half ending on December 28 in the range of $13.6 million and $14.6 million.

Charter Hall Retail REIT fell 0.5% to $4.28 after the real estate developer signed an agreement worth $19.6 million to sell Windsor Marketplace in New South Wales.

Insurance Australia Group Ltd dropped 1.1% to $6.28 after the insurance company estimated claim costs related to the series of earthquake losses affecting the Canterbury region New Zealand in 2010 and 2011 to increase between NZ$750 million and NZ$1 billion.

The insurer forecasted claim costs is expected to exceed the previous estimate of NZ$3.25 billion but still below the reserve of NZ$4 billion set aside for the claims.

Telstra Corporation Limited slipped 0.7% to $5.96 and the telecommunications and services provider agreed to acquire undersea cable operator Pacnet Limited for US$697 million to expand in Asia.

The transaction is expected to close during the mid of 2015.