Financials Rebound Lift Australian Index

123jump.com Staff
12 Sep, 2008
New York City

Australia lowered its wheat production estimate to 21 million tons from as high as 24 million tons. Perilya Ltd led advancers in the benchmark ASX 200 index shares with an increase of 61% followed by rise in Allco Finance Group of 27%. New Zealand July retail sales declined 0.8% after dropping 1% in June.

[R]3:00AM New York, 7:00PM Sydney – Financial stocks rallied on the hopes that credit markets may stabilize if Lehman Brothers succeeds in attracting significant investor group.[/R]

Stocks in Australia increased as news that Lehman Brothers has approached the Bank of America to seek a buyer for the whole group buoyed financial stocks. Media speculation suggested that Barclays may be interested in exploring possible acquisition of Lehman.

[Market Sentiment

In Sydney trading S&P/ASX 200 rose 1.86% or 89.5 to 4,903.80.

Of the 200 S&P/ASX 200 stocks 144 rose, 50 declined, and 6 were unchanged. Perilya Ltd. led advancers in the index shares with an increase of 60.98% followed by Allco Finance Group gaining 27.27% on hopes that current credit market crisis can be averted if Lehman Brothers finds a buyer.

Lehman Brothers in Takeover Talks with BofA

Lehman Brothers, the venerable 158-year old investment bank may be forced to sell the company as it toys with selling assets and events move faster than management anticipated. The company is still facing mounting losses in its mortgage portfolio and may face financial ruin if it fails to attract significant investors in the immediate future.

The investment bank has declared losses in last five consecutive quarters and accumulated losses of $15 billion. Two separate consortiums of banks and private equity funds led by Bank of America and Barclays are negotiating with Lehman according to the Wall Street Journal and New York Times.

New Zealand Retail Sales Drop 0.8% in July

Statistics Bureau reported on its Web site today that total retail sales declined 0.8% in July from an increase of 1% a month earlier.

Core retailing, excluding four vehicle-related industries, dropped 0.2% in the review period. Motor vehicle trading led the decline with a fall of 5.3% or $32 million followed by supermarket and grocery stores slumping 2% or $24 million.

Conversely, industries that had the largest increase were clothing and soft-goods retailing increasing 9% and department stores advancing 5.9% or $18 million. According to the report, half of the 24 industries had modest sales movements. On the overall, the total retail sales trend has been flat since December 2007.

Decreases were mainly recorded in Auckland, Waikato, Wellington and the remainder of North Island, while Canterbury and the remainder of the South Island experienced increased sales.

Wheat Production Falls to 21 million Tons

Bloomberg News reported on its Web site today that according to Rabobank Group Australia’s wheat production will fall to 21 million metric tons from an earlier estimate of between 20 million to 24 million tons. Earlier the Australian Bureau of Agricultural Resource Economics had projected a wheat crop of 23.7 million tons in June.

Gainers & Losers

Perilya Ltd led advancers in the S&P/ ASX 200 index shares with an increase of 60.98% followed by rises in Allco Finance Group of 27.27%, in Beach Petroleum of 14.20%, in Panoramic Resources of 13.79%, and Minara Resources of 11.70%.

Commodity stocks also increased as well. Acquarius Platinum advanced 10.49%, Platinum Australia increased 8.03% and Oz Minerals Ltd soared 6.30%.

Centro Retail Group led decliners in the S&P/ ASX 200 index shares with a fall of 14.71% followed by losses in Babcock & Brown of 11.11%, in Babcock & Brown of 8.14%, in Bunnings Warehouse of 6.42%, in APN/UKA European of 6.38%.