Australia Hikes Rates, Stocks Gain

123jump.com Staff
07 Nov, 2007
New York City

Gains in big mining stocks, riding on the back of increases in oil and metal prices, helped the index to remain in the positive for the second day. ASX 200 index was up 1% to close at 6,682.40. Reserve bank of Australia raised interest rates by 25-basis points to 6.75%. Wesfarmers received 99% of shareholders approve to acquire retail chain Coles. Telstra shareholders disapproved executive perks. Australian dollar jumps to 23-year high.

[R]4:00AM New York, 8:00PM Sydney - The Australia index 1% traded in the positive due to gains in mining shares.[/R]

ASX 200 index gained 1% or 64.40 to close at 6,692.40. BHP Billiton added 1.6%, Newcrest Mining Ltd increased 6.3%, and Woodside Oil gained 3.4%.

Preliminary stock turnover reached 1.87 billion, worth a total value of A$6.66 billion, with 742 stocks up, 561 down, and 366 unchanged.

Comdek topped the most active stock list with 99.54 million shares changing hands worth A$6.7 million.

The Reserve Bank of Australia today raised interest rates by 25-basis points to 6.75%, marking the sixth increase since the 2004 election. The interest rates are at 11-year high.

Prime Minister Howard apologized to the people struggling to pay off their mortgages, saying the decision will have negative consequences for a lot of borrowers. He said he sympathized with them.

The statistics bureau reported that home prices surged 10.6% in the third quarter from a year ago.

Australian conglomerate Wesfarmers received approval for its A$19.7 billion ($18.5 billion) takeover of supermarket giant Coles, in the largest buyout in Australia.

Shareholders trust that the new owner can reverse a two-year decline in sales growth at the supermarket giant. Of the total shareholders 99% voted in favor of the merger, above the required 75% for the transaction. The approval finally puts an end to 15 months of tussling for control of Coles, which twice rejected cash offers from buyout firms led by Kohlberg Kravis Roberts & Co.

Wesfarmers plans to spend A$5 billion on Coles 3,000 supermarkets, Kmart discount department stores and Officeworks stationery outlets to increase sales. Coles added 1.4% and Wesfarmers edged higher 1%.

Telstra shareholders have rejected the dominant Telco''s new executive pay structure, with early figures showing the majority of votes were cast against the company''s remuneration report. In a non-binding voting of the 3.63 billion share holders voting, only 1.83 billion were in favor of the pay rises at Telstra''s annual general meeting today.

The Australian dollar crossed through the $0.93 today to reach 23-year high on hike in interest rate. The Australian dollar was trading at $0.9374 up almost one and a half cents from yesterday''s close of $0.9230. During the day, it traded between a low of $0.9275 and reached a 23-year high of $0.9386.

Of the ASX 200 index shares, Bolnisi Gold led the gainers with a rise of 12.6% followed by increases in Independence group by 7.7%, in Pan Australia Resource Limited by 7.1%, in Mincor Resources by 6.5%, and in Newcrest Mining by 6.3%.

Of the ASX 200 index stocks, CSR Limited led the decliners with a fall of 2.4% followed by Macquarie DDR TR on 2.5%, Ansell Limited by 3.7%, in Downer EDI Limited by 4.2%, and 11.1% in Emeco Holdings L.

In the resource stocks Rio Tinto put on 3.4%. In the energy sector Santos and Oil Search were up at 2.2% and 4.2% respectively after oil prices rose to a record high of more than $97 a barrel overnight.

In the gold sector Lihir Gold added 5% after a near three-decade peak in gold price at $834.80 an ounce.

The banks were mixed, with National Australia Bank gaining 1%, Commonwealth Bank adding 0.6%, Westpac dipping 2% and Australia and New Zealand losing 0.3%.

CSR dipped 2.4% after the company reported a fall in first half profit and forecast an expected dip in annual earnings. The company said its sugar operations continue to be hampered by lower commodity prices and a high Australian dollar.

The retailers were stronger after Woolworths added 2.5%, David Jones increased 1.5% and Harvey Norman gained 2.5%.