Australian Record Reflects Asian Trend

123jump.com Staff
11 Oct, 2007
New York City

Australian stocks closed at another record after adding 0.52% to close at 6,779.60 on ASX 200 index. The jobless rate in September fell to 4.2%. The Australian dollar crossed $0.90 to one dollar. Murchison Metals battle for Midwest heated up after it urged Midwest shareholders to note that a deal between Sinosteel and Midwest is still tentative. Murchison and Midwest are battling to buid a port on the Western Australian coast. India, Indonesia, and Hong Kong at record close.

[R]7:00AM New York, 7:00PM Hong Kong – Unemployment rate fell to 4.2% in September as 13,000 people join labor force.[/R]

ASX 200 index in Sydney trading closed at another record of 35 or 0.52% to 6,779.60 on a rise in resource, retail, and banking stocks.

The Australian Bureau of Statistics in Sydney reported that at the end of September that seasonally adjusted employed people increased by 13,000 to 10.527 million dropping the unemployment rate to 4.2% from 4.3% in August. The unemployment rate in September 2006 was at 4.7%. The report also said that the full-time employment decreased by 17,200 to 7.522 million and part-time employment increased by 30,100 to 3.005 million.

The October employment report will be released on November 8th.

The dollar breached the $0.90 mark for the second time this week after trading stronger after the domestic jobless rate fell to a fresh 33-year low. The Australian dollar against the U.S. dollar closed at $0.9010 up from yesterday''s close of $0.8992 after reaching $0.9015.

Of the ASX 200 index shares, Sally Malay Mini led the gainers with a rise of 7.3% followed by increases in Murchison Metals by 6%, in Aquarius by 5.9%, in Perilya Ltd by 4.7%, and in Flight Centre by 4.4%.

Of the ASX 200 index stocks Seek Ltd led the decliners with a fall of 2.6% followed by losses in Transfield Services of 2.8%, Boon Logistics of 3%, Cons Minerals on 3.4% and Independence Group of 4.3%.

In the energy sector Oil Search was up 1.2%, but Santos declined 0.4%. Gold miners also rose on higher metal prices lifting Lihir rose 3%.

The banks were also stronger with ANZ gaining 0.5%, the Commonwealth Bank adding 1.5%, the National Australia Bank adding 0.1% and Westpac edged 0.1% higher.

Retailers were mixed, with Coles Meyer up 0.7%, Harvey Norman 0.8% and Woolworths was down by 0.5%.

In the media sector, News Corp was up 0.4%, Telco Telstra put on 1.3% while Fairfax and PBL were down 0.4% and 0.5% respectively.

National carrier Qantas added 0.3% after it announced that a delay in the delivery of its Boeing 787 Dreamliner aircraft would not materially affect its operations.

Mitsubishi controlled Murchison Metals Ltd, which launched a unsolicited and unconditional bid for Midwest Corp controlled by Sinosteel Corp yesterday, has announced that it will honor the agreement between Sinosteel and Midwest but also pointed out in the release that Sinosteel does not have an immediate or any unconditional right to acquire a 50% interest in the projects the subject of the Sinosteel Midwest joint venture.

Murchison launched its bid for the rival Midwest to eliminate competition in a project to build a port and railways link on Australia''s west coast to ship ore to China and Japan.

The release further added that Sinosteel and Midwest each approve the pre-feasibility and bankable feasibility studies for that project; and Sinosteel and Midwest agree the terms of an operating joint venture agreement for that project. If a project does not progress to an operating joint venture Sinosteel and Midwest are each able to terminate the Sinosteel joint venture. If terminated, Midwest retains the mining tenements.

Midwest has entered into binding exclusive arrangements with Yilgarn Infrastructure Limited in relation to being a foundation user and to assist Yilgarn to progress development of the new rail and port infrastructure as quickly as possible.

Mitsubishi and Murchison''s are to develop Jack Hills mine, along with a port and 490 kilometers of railroad through the Australian hinterlands. The combined output of a merger between Murchison and Midwest will be 4 million metric tons of iron ore a year from next year, and 45 million tons by 2013 according to presentation on the Murchison web site.

Murchison stock gained 6% at the close of trade after edging 2% a day ago while Midwest gained 9.4% after surging 28% in the previous session.

The Bank of Queensland Ltd announced it had increased second-half profit of 54 percent on mortgage lending and a sale of its credit-card unit. The bank''s net income rose to A$81.4 million in the six months ended Aug. 31, from A$52.7 million a year earlier. On the earnings news the stock gained 2.5% to close at A$19.40.


[R]5:00AM New York, 6:00PM Tokyo- Stocks in Tokyo were lifted after the BoJ left the rates unchanged.[/R]

In Tokyo trading Nikkei 225 rose 1.64% or 281.09 to 17,458.98, while the broader Topix index climbed 1.2% or 19.34 to 1,677.52.

Bank of Japan today held the key lending rate at 0.5% by 8 to 1 vote at the conclusion of its two-day meeting. Atsushi Mizuno, the lone dissenter voted for an increase for the fourth time.

According to the bank’s report on recent economic and financial developments released after the meeting, business sentiment has remained favorable although it has become cautious in some sectors. Private consumption also has been leveraged by the moderate rise in household income. Public investment is however projected to be on the downside.

Rating agency Moody’s, upgraded sovereign debt lifting the sentiment in the market. However, Moody’s has come under fire in the U.S. for its questionable practices in the subprime bonds rating. The Finance Ministry has forecasted primary deficit for the current fiscal year to drop to 4.4 trillion yen from 11.2 trillion. The new administration led by the Prime Minister Fukuda has said that he is committed to balancing the budget within five years.

Cabinet Office said today the total value of machine orders received by 280 manufacturers operating in Japan increased by 7.1% to 2.77 trillion yen in August from the previous month on a seasonally adjusted basis when orders had slumped 2.5 trillion-yen. However, private sector machinery orders which can be volatile fell by 7.7% to 1.4 trillion yen. Machine orders for manufacturing sector also fell 8.6% to 447 billion yen, while those from overseas surged 23% in August to 1.2 trillion yen after falling 10.8% in July.

Ministry of Finance said today the current account surplus for August soared for the eighth month by 42.1% to 2.081 trillion from a year earlier on firm exports to Asia and Europe.

Merchandise trade surplus surged 185.2% to 892.2 billion yen as exports increased 14% to 6.7 trillion yen at a higher rate than imports increase of 4.3% to 5.7 trillion yen. Imports were mainly spurred by steel and automobile exports after the July 16 earthquake in Niigata Prefecture that had caused supply disruptions to industry.

Balance of trade in goods and services rose 316% to 684 billion yen from last year, while income surplus increased 7.3% to 1.4 trillion yen on rising interest income and dividends from overseas investments.


Of the Nikkei 225 stocks 168 gained, 49 slipped, and 8 traded unchanged. Hitachi Zosen led the gainers with a rise of 7.02% on increases in freight charges of metals and commodities.

Daily trading volume on the first section was reported at 8.5 billion shares valued at 1.21 trillion yen compared to 1.7 billion shares in the previous session. In the second section trading volume was 574 million shares worth 37 billion yen compared to 80 million shares a day ago.

Crude oil prices firmed for the second day, jumping 1% to $81.30 per barrel. Mitsubishi Corp added 4.26%, Nippon Oil Corp climbed 2.14% and Inpex Holdings edged up 3.31%.

Metal prices also gained as nickel copper rose 1.5%, nickel jumped 2.6% and zinc soared 2.3%. Nippon Mining Holdings gained 2.21% and Sumitomo Metals Mining firmed 4.09 as a result.

Of the index shares Hitachi Zosen led gainers, rising 7.02% followed by gains in Mitsumi Electric Co Limited of 6.08%, in NGK Industries of 5.96%, in Yahoo Japan Corp of 5.94% and Marubeni Corp of 5.75%.

Hitachi Zosen and other ship builders soared as freight charges of metals and commodities increased. The Baltic Dry Index, which measures the price increases, edged up 3.6%, gaining 130% this year. Nippon Yusen climbed 5.11% and Mitsui Engineering & Shipbuilding Company Limited gained 1.60%.

Nippon Suisan led declining shares, slipping 3.86%, followed by losses of 3.64% in Casio Computer, 3.62% in Matsushita Electric Works, 2.99% in Chugai Pharmaceutical Company and 2.67% in T&D Holding Inc.

Mitsubishi Heavy Industries and Kawasaki Heavy Industries fell 1.24% and 2.20% after Boeing announced today a six-month delay in initial deliveries of 787 Dreamliner due to parts shortages and integrating various assemblies. Mitsubishi supplies parts and assemblies for wings worth $6 billion for the Dreamliner project.

Sony Financial Holdings gained 4% on the first trading day today in the largest initial public offering for the year in Japan. The offering was priced at 400,000 yen and raised 320 billion yen. The stock jumped to 424,000 yen at its peak but settled at 415,000 yen at close. The financial company offers life and auto insurance and operates an online bank. The rival insurance company T&D Holdings, the only other insurance company traded on the exchange is trading at twice the market value of Sony Financial but is growing at a slower pace than Sony Financial.





October 11, 2007
Bank of Japan

Monthly Report of Recent Economic and Financial Developments October 2007 (The Bank''s View)

Japan''s economy is expanding moderately.

Public investment has been sluggish. Meanwhile, exports have continued to increase. Corporate profits have been high, and business sentiment has remained generally favorable although it has become cautious in some sectors. Under these circumstances, business fixed investment has also continued to trend upward. Housing investment has fallen lately. Private consumption, however, has been firm in a situation where household income has continued rising moderately. With the rise in demand both at home and abroad, production has continued to be on an increasing trend.

Japan''s economy is expected to continue expanding moderately.

Exports are expected to continue rising against the background of the expansion of overseas economies as a whole. Domestic private demand is likely to continue increasing against the background of high corporate profits and the moderate rise in household income. In light of these increases in demand both at home and abroad, production is also expected to follow an increasing trend. Public investment, meanwhile, is projected to be on a downtrend.

On the price front, the three-month rate of change in domestic corporate goods prices has been positive, mainly due to the rise in international commodity prices. The year-on-year rate of change in consumer prices (excluding fresh food) has been around zero percent.
Domestic corporate goods prices are likely to continue increasing for the time being, although the pace of increase is expected to slow. The year-on-year rate of change in consumer prices is expected to be around zero percent in the short run. From a longer-term perspective, however, it is projected to continue to follow a positive trend, as the output gap continues to be positive.

As for the financial environment, the environment for corporate finance is accommodative. Credit demand in the private sector has been more or less flat. However, the issuing environment for CP and corporate bonds has been favorable, and the lending attitudes of private banks have continued to be accommodative. Under these circumstances, the amount outstanding of lending by private banks has been increasing moderately, and the amount outstanding of CP and corporate bonds issued has been above the previous year''s level. Funding costs for firms have risen slightly. Meanwhile, the year-on-year rate of change in the money stock is around 2 percent. As for developments in financial markets, in the money markets, the overnight call rate has been at around 0.5 percent, and interest rates on term instruments have been around the same level as last month. In the foreign exchange and capital markets, long-term interest rates and stock prices have risen compared with last month, while the yen has depreciated against the U.S. dollar compared with last month.

The original document can be found at the site link below:

http://www.boj.or.jp/en/type/release/teiki/gp/gp0710.htm