Financials Lift Australia 4.3% Higher

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

Australia stock index surged tracking gains in the overnight trading in the U.S. markets. The Reserve Bank of Australia added A$1 billion liquidity as six other central bankers provided $247 billion in the new credit facility for the short term liquidity. The move lifted investors mood and financial stocks soared. Macquarie Group led advancers in the ASX 200 index shares with a rise of 37% followed by rises in Babcock & Brown of 25%, in Kagara Ltd of 25% and in Great Southern Ltd of 21.3%.

[R]3:00AM New York, 7:00PM Sydney - Reserve Bank of Australia pumps additional A$1 billion in money markets.[/R]

Stocks in Australia posted solid gains as financial stocks rallied after central banks broadened their intervention efforts to calm the turmoil on the global credit market.

Market Sentiment

In Sydney trading ASX 200 rose 4.27% or 196.8 to 4,804.10.

Of the 200 ASX stocks 146 rose, 43 declined, and 11 were unchanged. Macquarie Group led advancers in the index shares with a rise of 37.81% as central banks ratcheted up efforts to provide the markets will liquidity.

Central Banks Widens Interventions

The Reserve Bank of Australia injected an additional A$1 billion today, bringing the amount that has been extended so far this week to A$12 billion as central banks increase liquidity.

Separately, the U.S. Federal Reserve and central banks including the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, the Bank of Japan, and the Swiss National Bank in coordinated measures provided dollar liquidity in the short-term funding market.

Federal Open Market Committee has also authorized a $180 billion expansion of its temporary reciprocal currency arrangements and the increased capacity will be available to provide dollar funding for both term and overnight liquidity operations by the other central banks.

In addition, FOMC has authorized till the end of January 2009, increases in the existing swap lines with the ECB up to $110 billion and the Swiss National Bank up to $27 billion. New facilities will support the provision of U.S. dollar liquidity in amounts of up to $60 billion by the Bank of Japan, $40 billion by the Bank of England, and $10 billion by the Bank of Canada.

BHP Contends $111 billion Bid Attractive

Bloomberg News reported on its Web site today that BHP Billiton Chief Executive Officer Marius Kloppers said in an interview today that $111 billion takeover bid of Rio Tinto is an attractive offer in the present turbulent period in the financial markets.

Kloppers said, “The way the Rio Tinto share has traded compared to ours underscores our point quite well. We find it very difficult to see at that 45% premium uplift we have offered Rio Tinto shareholders, that they cannot do that on a stand-alone basis.”

Gainers & Losers

Financials rose after the coordinated action among central banks in the world. Macquarie Group led advancers in the ASX 200 index shares with a rise of 37.18% followed by rises in Babcock & Brown of 25%, in Kagara Ltd of 25%, in Great Southern Ltd of 21.31%, and Centro Retail Group of 20%.

National Bank of Australia increased 17.35% as well.

Energy stocks also rose. Energy Resources of Australia gained 16.55% and Roc Oil edged up 13.22%.

APN/UKA European led decliners in the ASX 200 index shares with a fall of 30.23% followed by losses in Centro Properties of 22.08%, in Straits Resources Ltd. of 8.33%, in Macquarie DDR Trust of 8.20%, and Allco Finance of 7.69%.

Property companies declined on concern over tightening conditions in the credit markets. Valad Property fell 4.55% and FKP Property Group slumped 3.35%.