Australian Stocks Surge 4%, PPI Rises 2%

123jump.com Staff
20 Oct, 2008
New York City

Australian stocks surged 4% after money market rates declined and crude oil and metals prices gained. Producer price index for three months ending in September rose 2%. Australian dollar gained 1.5% against one U.S. dollar.

[R]3:00AM New York, 7:00PM Sydney - Australian producer prices index rises 2% in third quarter to September. Stocks gain on a rise in metals and crude oil prices.[/R]

Australian stocks surged 4% after money markets rates dropped, crude oil and base metal prices gained and talks of second stimulus package made rounds in the U.S. House.

Energy stocks were buoyed by speculation that OPEC members will agree to cut production at the next meeting on Thursday.

Chakib Khelil, OPEC's president and Algerian energy minister, said on Saturday there needs to be a substantial cut in production to balance demand and supply. Iran and Venezuela also pushed for higher oil prices and lower production.

Market Sentiment

In Sydney trading ASX 200 index rose 4.32% or 171.5 to 4.142.30. Of the ASX 200 index stocks, 141 advanced, 51 declined, and 8 were unchanged.

Babcock & Brown led advancers in the index shares with a rise of 18.6% followed by Centro Retail Group increasing 17%.

Australian Producer Prices Index Soars 2%

The Australian Bureau of Statistics reported today that producer prices rose more than forecasted to 2% in the three months to September, beating the private economists’ forecasts of a gain of 1.2%.

Producer prices gained on building construction costs rising 1.8%; electricity, gas and water soaring 7.4% and dairy products and manufacturing increasing 5.5%.

Increases were however trimmed by motor vehicle and parts manufacturing prices dropping 2.4%.

The statistics bureau noted that producer prices for intermediate commodities also gained 3.7% in the quarter to September driven by price surge of 192% in coal mining, 16% in iron and steel manufacturing, 17.7% in basic chemical manufacturing and 7.6% in oil and gas extraction.

Intermediate commodity prices were dragged by a fall in grain, sheep and beef farming prices of 3.7%, and metal ore mining down 4.2%.

Preliminary commodities prices also rose 5.5% in the third quarter ended September and advanced 9.7% from a year earlier.


Separately, the statistics bureau said merchandise imports edged up 14% to A$20.9 billion in September from a revised A$18.4 billion the previous month.

Goods imports on a balance of payments basis increased 8% in seasonally adjusted terms in September from the previous month.

Australian Dollar Rises

The Australian Dollar rose 1.5% to 69.94 Australian cents and 1.9% to 71.31 Australian cents to 100 yen.

South Korea proposed $100 billion in payment guarantees for its domestic banks to bolster confidence of depositors.

Gainers & Losers

Babcock & Brown led advancers in the ASX 200 index shares with a rise of 18.6% followed by increases in Centro Retail Group of 17%, in Babcock & Brown in 15%, in Babcock & Brown of 14.1%, and Nexus Energy of 11.7%.

Financial stocks rose after the rate banks charge each other for three-month loans eased to a spread of 57 basis points from 75 basis points on Friday last week. The rates declined to the lowest since Lehman Brothers filed for bankruptcy a month ago.

Energy stocks rose after oil prices gained 1.9% to $73.19 per barrel on speculation that OPEC will significantly lower output at its extra ordinary meeting in Vienna on October 24.

Oil Search Ltd. soared 8.80% and Oz Minerals Ltd. rose 8.12%.

Atlas Iron Ltd. led decliners in the ASX 200 index shares with a fall of 20% followed by losses in Ausenco Ltd. of 10.30%, in Murchison Metals of 9.09%, in Kagara Ltd. of 8.14%, and NRW Holdings of 7.33%.

Other commodity stocks also declined. Minara Resources plummeted 7.24% and Panoramic Resources shed 4.83%.

Macquarie Takes A$70 million Charge

Macquarie Group reported today in a statement that the company will sell its Italian mortgages unit on rising funding costs.

The Group will take a A$70 million charge from writing off loan acquisition costs and a loss on sale.

Disposal of the mortgage unit will be completed by October 31.