Australian Stocks Fell on Rising Home Rates

123jump.com Staff
22 Nov, 2001
New York City

Australian stocks closed in the negative today after losses in banks and miners as metal and oil prices sank from records and as the market failed to shake off this weeks losing streak triggered by losses on Wall Street. ASX 200 index was down 0.8% to close at 6,334.30. The Commonwealth Bank announced today that it is ready to lift interest rates on variable home loans again. BHP Billiton told Chinese steelmakers that it will not use the takeover of Rio Tinto to control prices.

[R]5:00AM New York, 9:00PM Sydney - The Australia index fell by 0.8% as mining and banking stocks traded lower.[/R]

ASX 200 index slid by 0.8% or 50 to close at 6,334.30. BHP Billiton was down 1.5%, Woodside Petroleum was lower at 2.4%, the Australia and New Zealand Bank slid 1%. Preliminary stock turnover was 3.44 billion shares at a value of $6.56 billion, with 367 stocks up, 929 down and 359 unchanged.

The most traded stock on the market today was Flinders Diamonds, with 1.93 million shares, worth $110.2 million. Shares in Flinders Diamonds closed 790% higher.

Australia''s biggest home lender, Commonwealth Bank announced today that it is ready to lift interest rates on variable home loans again, saying higher funding costs caused by the US mortgage crisis need to be passed on to customers .

""Obviously our funding costs, like everyone else in the market, have increased significantly,'''' CBA head of retail products Michael Cant told analysts at an operational briefing, ""this will ultimately need to be passed on to customers across the industry in the form of higher rates.”


CBA raised rates earlier this month after a rise in official interest rates to 6.75% by the Reserve Bank. The bank lifted its variable lending rates to 8.57%.

Despite record profits, the bank''s variable home-loan rate is set to rise again. CBA posted a record cash profit of $4.6 billion for the 12 months to the end of June, up 18% on the 2006 result.

BHP Billiton Ltd. has assured Chinese steelmakers, that it would refrain from controlling price in the event that its take over bid of Rio Tinto succeeds.

The assurance was made after BHP Billiton chief executive Marius Kloppers called on the offices of China''s top steelmaker overnight as BHP presses its case for a takeover of rival Rio Tinto amid a mounting chorus of opposition to the merger from its customers. Kloppers met executives of Jiangsu Shagang Group Co, Wuhan Iron & Steel Group, and Magang (Group) Holdings Co. in Shanghai.

Shagang Chairman Shen Wenrong told reporters after the meeting that they had informed Kloppers that they wanted to see reasonable iron ore prices after the merger and he responded by saying that prices will continue to be decided by the market.

According to a prediction made by the Macquarie Group last month, iron-ore prices that have tripled in the past five years on increased Chinese demand may rise by 50 percent next year.

Mr Kloppers is touring Asian customers to drum up support of steelmakers, which want regulators to block its takeover bid which will result in the creation of a company that would account for more than a third of global iron-ore trade. The combined company would rival Brazil''s Cia. Vale do Rio Doce, the largest iron ore producer in the world.

A state newspaper reported on Tuesday that China''s steel industry, the world''s largest, was deeply concerned about the merger -- which would create the world''s biggest mining force, with control of huge amounts of iron ore, copper, coal, uranium, diamonds and other commodities for industrial use.

The dollar closed weaker today as the bout of risk aversion continued to put pressure on the currency. At the close the Australian dollar was trading at $0.8762/65, down almost one cent from yesterday''s close of $0.8853/58.

Of the ASX 200 index shares, Australia Worldwide led the gainers with a rise of 6.3% followed by increases in AED Oil Limited by 6%, in Duet Group by 4%, in Incitec Pivot Limited by 3.7%, and in CSL Limited by 3.2%.

Of the ASX 200 index stocks Macmahon Holdings led the decliners with a fall of 6.6% followed by losses in Mount Gibson Iron of 6.8%, Perilya Limited by 6.9%, in Independence Group by 7.3%, and 8.6% in ABC Learning.

In the other stocks, Rio Tinto was lower at 1.6%. In the energy sector Santos was lower at 2.1% and Oil Search declined by 2.3%. In the gold sector, the spot gold price was $803.50, up $1.45 on Wednesday''s closing price in Sydney of $802.05.

The gold miners were down with Newcrest Mining shedding 1.9% and Lihir declined by 1.3%. In other banking stocks the National Australia Bank shed 2% and Westpac was lower at 0.3%.

Commonwealth Bank, Australia''s largest home lender, declined by 0.2% after it announced it would raise variable mortgage rates above the official cash rate rise to cover the increased funding costs caused by the U.S. sub-prime crisis and its effect on worldwide banking liquidity.

The retail sector were mixed Harvey Norman gained 2%, Wesfarmers, the new owner of Coles, enjoyed its fifth consecutive day on the up, closing 1%, Woolworths shed 0.9% and David Jones fell 1.2%.

Media stocks were mixed Publishing and Broadcasting was up 0.1%, Fairfax dipped 1.1%, News Corp was 1% lower. Ten Network''s shares dipped 1.5% after it said revenue for the six months to December 2007 would grow by at least 10%.

In other headlines, Gunns today faced a barrage of questions from shareholders at its annual general meeting about its planned $1.7 billion Tasmanian pulp mill, while protesters opposing the project gathered outside the company''s Launceston headquarters.

Shares in emerging iron ore miner Fortescue Metals Group had soared 1.3% on news it has signed an agreement with Chinese steel mill Hangzhou Iron and Steel Group for the supply of iron ore from its emerging project in Western Australia.