Global Weakness May Drag Australia

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

Stocks in Autralia on Wednesday morning are expected to open lower reflecting general weakness in European and American markets. Australian dollar is trading near 92 cents to an American dollar, record high on the expectations that interest may be heading lower in the U.S. Oxiana, copper and gold miner said that its capital cost for Prominent Hill project is likely to be 30% higher.

[R]9:00AM Sydney on Wednesday, 6:00PM New York on Tuesday[/R]

Markets on Tuesday closed lower in Europe, Asian and in the Americas. The U.S. averages closed lower led by a decline in oil, gold, copper, and weaker than expected earnings outlook from Procter & Gamble. Ahead of the Fed decision on Wednesday traders in the U.S. and Europe were cautious. Stocks in Australia are expected to open lower on rate decision, retail sales data, and trade deficit report.


In Tuesday’s trading Australian stocks rose and expected to open lower in the Wednesday morning trading. Australian dollar is expected to rise as American interest rates may be lowered. Australian dollar is likely to trade near or above 92 cents.

ASX 200 index gained 0.6% in Tuesday’s trading or 41.9 to close at 6,750.20. BHP Billiton lost 0.9% and Rio Tinto was down 0.6%. Preliminary stock turnover was 1.63 billion, worth A$5.91 billion, with 617 stocks up, 646 down and 389 unchanged.

Iron ore explorer Sundance Resources was the most traded stock on the market today with 60.24 million shares changing hands valued at A$38 million.

The Australian Bureau of Agricultural and Resource Economics (ABARE) revised downwards fiscal 2008 wheat yields to 12.1 million tons, Barley at 5 million tons, and Canola at 900,000 tons.

According to the statement released by ABARE, the continued deterioration in seasonal conditions over the critical September – October period, particularly in parts of South Australia, northern Victoria and New South Wales, influenced the revision of forecasts.

""Although a combined total of 18 million tons for the three major crops is around 42% below the five year average, it is still around 4 million tons above 2006-07 production,"" said Executive Director Phillip Glyde, in the released statement.

He said with the exception of Queensland, pockets of northern New South Wales and southern Western Australia, rainfall during the months of September and October period were below average.

New South Wales, he added, was particularly dry, with many regions recording their lowest September – October rainfall on the record.

""This lack of rainfall, combined with hotter than average daytime temperatures and strong winds has led to the rapid deterioration of crop yield potential and in many areas has resulted in total crop failure,"" Glyde said.

A significant number of winter cereal crops have also been cut for hay in an attempt to recoup some planting costs. Glyde noted that livestock have also been affected by the deterioration in seasonal conditions, with farmers continuing to reduce stock numbers.

The Australian dollar declined to $0.9166, down steeply from yesterday''s close of $0.9246.

Of the ASX 200 index shares, Sally Malay Mini led the gainers with a rise of 7.8% followed by increases in Kagara Zinc Limited by 7.1%, in Bradken by 6.3%, in Roc Oil Company by 4.8%, and in Pacific Brands by 4.3%.

Of the ASX 200 index stocks Santos Limited led the decliners with a fall of 4% followed by losses in Boart Longyear of 4.8%, Insurance Australia by 4,8%, in Zinifex Limited by 5.5%, and Lihir Gold Limited by 7%.

In the other stocks the banks were mixed, with Westpac adding 0.2%, Commonwealth Bank gaining 0.4%, National Australia Bank dropping 0.9% and ANZ losing 0.9%.

In energy sector Woodside Petroleum rose 3.1%. In the gold sector Newcrest Mining rose by 2.4% and Copper and gold miner Oxiana dipped 2% after its Prominent Hill project in South Australia suffered a $230 million cost blowout.

Tabcorp Holdings added 1.1% after the gaming giant said it was continuing to work with the NSW government on the future of its casino licence in New South Wales.

The retailers were mixed, with Woolworths added 0.7%, Harvey Norman increased 1.9%, Coles dipped 0.3% but David Jones lost 0.8%.

The Myer Family Company said today it would vote in favor of a proposal by Wesfarmers to acquire retailing giant Coles Group.

JB Hi-Fi added 4.3% after the electronics retailer said it expected its full year sales to rise by 33%, as current strong trading conditions continued.

The media sector was mixed, with Fairfax gaining 0.2%, PBL adding 1.5%, News Corp shedding 0.8% and its non-voting shares losing 20 cents to A$23.57.