Australian Banks Raise Rates

123jump.com Staff
07 Feb, 2008
New York City

Rio Tinto boards in the UK an Australia rejected the revised offer from BHP Billiton. The revised offer valued the comany at 3.4 shares to one share of Rio Tinto fell short of Rio Tinto expectations. Commonwealth Bank increased interest rates by 0.3% and Westpac and St George hiked rtes by 0.25% following a recent rate hike from the RBA. Agro-business company Futuris fell 6.5% after earnings fell 17% in the first half. IOOF stock plunged 10% after its lowered earnings outlook.

[R]3:00AM New York, 7:00PM Sydney- ASX 200 index fell 0.2% despite late rally in mining stocks.[/R]

Market Sentiment

ASX 200 index lost 0.2% or 12.7 to close at 5,596.70.

The Preliminary market turnover was 407.7 million shares worth $861.4 million, with 108 stocks moving up, 774 stocks moving down and 224 unchanged.

Market Drivers

The Australia and London listed arms of Rio Tinto today unanimously rejected the BHP Billiton Ltd''s, 3.4 BHP shares for one Rio Tinto share bid for the second time in as many months, saying that the offer ""significantly"" undervalued the mining company.

The directors said the decision had been reached after they had given ""careful consideration"" to the offer made public earlier in the day. Rio''s chairperson Paul Skinner said in a statement: ""BHP Billiton''s offers, while improved, still fail to recognise the underlying value of Rio Tinto''s quality assets and prospects. Our plans are unchanged, and will remain so unless a proposal is made that fully reflects the value of Rio Tinto.""

The offer requires acceptances from 50% or more shareholders of the publicly held shares in each of Rio Tinto limited, Rio Tinto plc and BHP Billiton.

Meanwhile Rio today announced 3 billion ton increase in its iron ore resource base in Western Australia. Analysts believe that the disclosure was designed to put more pressure on BHP Billiton to increase its bid for the company. Rio Tinto shares lost 0.1% while BHP Billiton added 0.7%.

Interest rates to rise

After the Reserve Bank of Australia raised its interest rates by 0.25% to 7% local banks have quickly passed the rate hike to customers despite vocal opposition from politicians.

The National Australia Bank announced that it would increase its interest rates within days but did not say by how much.

The Commonwealth Bank raised its interest rates yesterday by 0.3% while Westpac and St George Bank today increased their rates by 0.25%. Adelaide and Bendigo Bank have also announced they are passing on the increase in official interest rates to customers.


Gainers and losers

Of the ASX 200 index stocks, Allco Finance Group led the gainers with a rise of 12.8% followed by increases in Centro Properties of 12.3%, in Centennial Coal of 7.7%, Queensland Gas of 6%, and in Dyno Noble Ltd of 5.8%.

Of the ASX 200 index stocks, AED Oil Limited led the decliners with a fall of 12.7% followed by losses in IOOF Holdings Lt of 10.3%, in Futuris Corp Ltd of 6.5%, in Sally Malay Mini of 6.5% and in Boom Logistics of 5.5%.


Futuris predicts strong results

Agribusiness Futuris Corp Ltd today announced that it was expecting a strong performance ahead of the release of its earnings in the second half of the financial year, despite booking a lower first half net profit.

Net profit in the six months to December 31, 2007 declined 17% to $27.5 million from a year ago. Its net profit from continuing operations rose 20% to $27.5 million. The company''s property division, which has been sold, made a $10.1 million contribution after tax to the first half result for fiscal 2007. Futuris stock shed 6.5%.


IOOF share in 10% fall

Funds manager IOOF Ltd''s stock plunged 10.3% after it forecast a decline in first-half profit due to the fall of assets under its management. The company also downgraded its annual earnings guidance. IOOF said it expected its first-half net profit of between $15 million and $16 million compared to last year''s profit of $16.3 million.

IOOF also forecast its full-year underlying net profit to be similar to the prior year''s $29.2 million.


API shares advances

The drug distributor and beauty products retailer, Australian Pharmaceutical Industries Ltd''s sales rose 18% for the first five months of its fiscal 2008. The company said its turnaround was on track after former managing director Jeff Sher resigned last year when it reported a net loss of $11.27 million. API stock gained 5%.


Corporate Express halts acquisitions

Office products supplier Corporate Express Australia halted more acquisitions after posting a net profit of $68.039 million in 2007. Net Profit was up 0.6% from a year ago on revenue rise of 5.1% to $1.3 billion. Earnings before interest, tax, depreciation and amortization rose 7.2% to $112.9 million.

Chief executive Grant Harrold said profit had remained stable on the company''s strategy of moving into new markets, new product lines and acquisitions. Corp Express shares shed 3.9%.

Executive Appointments

Wesfarmers today announced the appointment of UK retailer Ian McLeod to lead the Coles Meyers supermarket and convenience business. Wefarmers assumed control of Coles more than two months. McLeod will assume his position in May of this year.

McLeod helped turn around the struggling Asda supermarket chain in the last decade and He led the Celtic Football Club in Scotland.

Investment banker, Mark Irwin has been appointed chief executive officer of Australia''s largest grain handler, GrainCorp Ltd effective March 31. Prior to his appointment, Irwin worked in corporate transactions at Standard Bank Plc