Australia Declines, Down 10% from Peak

123jump.com Staff
10 Jan, 2008
New York City

Australia is likley to miss most of the impact from the potential U.S. economic recession. Australia may b hurt if the Chinese demand slows down, but there may be a lag in the economi cycles. Economist Richard Gibbs of Macquarie Group said on the ABC Radio in Australia. The U.S. accounts only 7% of total Australian exports and economic slow down in the U.S. is not likely to have a direct impact on the Australian economy.

[R]4:00AM New York, 8:00PM Sydney – Westpac Banking sold $1.2 billion bonds yielding premium on weak global sentiment.[/R]

ASX 200 index lost 0.2% or 9 to close at 6,078.70.

The Preliminary market turnover was 1.76 billion, worth $6.02 billion, with 546 shares trading higher, 695 trading lower, and 365 unchanged.

The most actively traded stock was Centro Properties, with 102.4 million shares worth $95.6 million changing hands.

Qantas Airways Ltd defused a potentially damaging strike after agreeing with its engineers union to extend wage negotiation up to the end of this month.

The National Secretary of the Australian Licensed Aircraft Engineers Association, Steve Purvinas told reporters today that the airline and the association were negotiating a new pay settlement after having appeared before the Australian Industrial Relations Commission.

The engineers want a 5% increase in the annual pay, 2% more than the airline is offering.

The airline was reported to have reversed its earlier decision to cancel annual leave for its 1,700 engineers after they had threatened to refuse overtime work or perform the jobs of colleagues. The turnaround was in response for calls for both parties to hold hostilities as negotiations continue. Qantas share lost 1%.

Westpac Banking Corporation recorded the first local currency debt sale by an Australian bank this year. It sold $1.2 billion (U.S.$1.1 billion) bonds but only after it offered a higher yield.

According to National Australia Bank Ltd, investors were looking for higher returns on Australian corporate bonds on the back of the nation''s banks face increased refinancing costs on $8.4 billion of bonds due to mature this year.

The country''s four biggest banks took more than $10 billion of funding for structured investment vehicles so called SIV back onto their balance sheets in September. Westpac fell 1.3%.

Japan''s largest oil explorer, Inpex Holdings Inc cast doubt on its Ichthys liquefied natural gas project in Australia after indicating that it is still reviewing the project. Local media in Japan indicated that the project may cost more than earlier estimated.

Perth-based spokesman for the company, Sean Kildare was reported to have said the review meant that Inpex and its partner Total SA were holding back on a decision to start engineering and design work on the project.

Inpex and France''s Total S.A. plan to build two 3.8 million tons annual LNG production units on the Maret Islands off Western Australia. The preliminary cost of the project was put estimated at $10 billion (US$8.8 billion) with deliveries expected to start in 2013.

Centro Properties Group fell for the fourth-straight day by 22.5% after investors ditched the stock over concerns on the viability of the company. The Group was reported to have been questioned by regulators about accounting for its debt.

Centro Chief Executive Officer Andrew Scott has indicated that he wants to sell the group''s 700 malls in the U.S. that were acquired in the past two years after borrowing $9 billion. The asset sales will help the company to refinance $3.9 billion (US$3.4 billion) of debt by the February 15 deadline.

The Australian dollar traded near a four-week high despite it gaining marginally against the U.S. dollar today. At the close the Australian dollar was trading at 88.33 American cents up slightly from yesterday''s close of 88.29 cents. During the day, the dollar traded between a low of US$0.8820 US cents and a high of US$0.8854.

Of the ASX 200 index shares, AED Oil Limited led the gainers with a rise of 6% followed by increases in Minara Resources of 5.9%, in Perilya Limited of 5.8%, in Sally Malay Mini of 5.8%, and in Cabcharge Australia of 5%.

Of the ASX 200 index stocks, Centro Retail Group led the decliners with a fall of 24% followed by losses in Centro Properties of 22.5%, in MFS Limited of 9%, in Murchison Metals of 5.6% and in Mount Gibson Iron of 4.6%.