Australian Stocks Surge 4%, Westpac Net Up

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

Stocks in Australia surged on a steep rise in copper and crude oil prices. The U.S. Fed rate cut of 0.5% to 1% lifted prices of base metals and energy in Asian trading. The benchmark index ASX 200 index surged 4% and closed at 4,001.10. Australian dollar surged 5% to 68.22 U.S. cents to a dollar.

[R]3:00AM New York, 7:00PM Sydney - U.S. rate cut cheers Australian stocks. Westpac full-year profit rises 6% to A$3.72 billion.[/R]

Commodities stocks led the rally in Australia. The benchmark index rose 4% and closed above 4,000 after the U.S. Federal Reserve lowered its key rate by 50 basis points to 1%.

Copper futures for December delivery surged 12%, while crude oil prices jumped near $70 a barrel.

In Sydney trading ASX 200 gained 4% or 155.5 to 4,001.10.

Of the ASX 200 index stocks 147 gained, 39 declined, and 14 were unchanged. Platinum Australia led advancers in the index shares with a rise of 63.5% as metal prices increased on expectation that demand will rise.

U.S. Fed Reserve Cuts ate to 1%

The Federal Reserve in unanimous decision lowered the interest rate by 0.5% to 1%. The Fed hopes that rate cut will spur lending and support consumer spending. The rates are now the lowest since 2003 and 2004 period when the Fed had lowered the rate to prevent the economy from slipping into a recession.

Central bank in China and Norway lowered rates as well. China lowered lending and deposit rates for the third time in less than two months. China has been battling slowing economic growth and in the third quarter the rate declined to 9% from 11.9% in the first quarter of this year.

People’s Bank of China lowered the deposit rate to 3.60% from 3.87% and one year loan rates to 6.66% from 6.93%.

Similarly the Hong Kong Monetary Authority cut its benchmark rate to 1.5% from 2% in line with the Fed Reserve actions.

Inflation to Limit Scope For Australia Rate Cut

Reserve Bank of Australia deputy governor Ric Battellino reported today in a speech on household finances that the bank has a task to balance inflation and growth and scope for future rate cuts will be limited.

Battellino noted that the growth in real incomes over the next year will be muted than the past five years when real disposable incomes rose by more than 30%.

The deputy governor said any attempts to maintain a never-ending boom will lead to future economic difficulties.

Australian Dollar Rises

The Australian dollar rose 5% to 68.22 U.S. cents against a U.S. dollar.

Gainers & Losers

Platinum Australia led advancers in the ASX 200 index stocks with a rise of 63.5% followed by gains in Murchison Metals of 55.6%, in Minara Resources of 32.5%, in Ausenco of 26.7%, and Acquarius Platinum of 22.8%.

Commodity stocks rose after metal prices increased. Copper futures for December delivery soared 12% and gold prices advanced to $768 per ounce.

Crude oil for December delivery jumped 7.6% to $67.50 per barrel. Avoca Resource edged up 22.6%, Riversdale Mining gained 20.6%.

Sino Gold and Lihir Gold increased 19.3% and 19.2% respectively.

Macquarie DDR led decliners in the ASX 200 index shares with a fall of 10.6% followed by losses in Goodman Corp. of 9.1%, in West Australia Newspaper of 8.4%, Macquarie Countrywide of 8.3%, and GPT Group of 7.1%.

Westpac Full-Year Profit Rises 6% to A$3.72 billion

Westpac reported today that full year profit in the period ended September 30 increased 6% to A$3.72 billion, in line with the market consensus. Cash earnings per share gained 5% to 198.3 cents per share.

Revenue soared to A$11.1 billion and lending and deposit growth increased 13% and 16% respectively.

However provision for bad and doubtful debts surged 93% to A$931 million from A$482 million a year earlier on rising unemployment.

The lender increased its second half dividend by 8% to 72 cents per share, increasing the full year dividend to A$1.42 per share.