Australia Gains on Oil Rally, ANZ Cuts Staff

123jump.com Staff
14 Nov, 2008
New York City

Stocks in Australia gained 1.4% but fell more than 7% in the week. Australian dollar gained but remained vulnerable to global economic slowdown. Commodities and energy stocks rallied on higher oil prices. Australia bought A$500 million of mortgage backed securities.

[R]3:00AM New York, 7:00PM – Stocks in Australia rallied on the hopes of higher oil prices and gains in overnight trading in New York.[/R]

Stocks in Australia rose 1.4% buoyed by overnight gains on Wall Street and prospects of higher oil prices.

Commodities and energy stocks gained in the session but investors were remained cautious in the broader trading.

In Sydney trading ASX 200 rallied 1.4% or 50.8 to 3,748.10 but fell 7.4% for the week.

Of the ASX 200 stocks 133 rose, 55 declined, and 12 were unchanged. NRW Holdings led gainers in the index shares with a rise of 23.3% followed by Sims Group increasing 11.5%.

Australia Buys A$500 million of RMBS

The newspaper Australian reported today that the government purchased its first tranche of troubled residential mortgage-based securities in order to stimulate activity in the non-bank home lending market.

Australian Office of Financial Management purchased A$500 million of RMBS from privately owned mortgage lender FirstMac, while A$100 million of the $600 million bond offer was taken up by private investors.

Deteriorating conditions on the global financial markets has led banks to assume a stranglehold on Australia’s home lending markets.

FirstMac chief financial officer James Austin said, “The main benefit will be that it will allow more funding to be provided for mortgages. FirstMac relies 100% on the securities market and over the past 12 months these markets have been closed.”

Suitors Approach ABC Learning Centres

Australia’s deputy Prime Minister Julia Gillard reported today that four separate groups have approached ABC Learning Centres in order to buy some of its operations.

Gillard said the company doesn’t require additional funding.

The company was recently placed under voluntary administration after failing to pay its debts and the government injected A$22 million to keep the various centres open until the end of the year.

Austrian Currency Drops

The Australian dollar declined 2.8% to 65.53 American cents from 67.41 cents on Friday last week, and fell 3.9% to 63.65 yen from 66.20 yen a week earlier.

Gainers & Losers

NRW Holdings led advancers in the ASX 200 index shares with a rise of 23.3% followed by increases in Sims Group of 11.5%, in Energy Resources Australia of 11.3%, in Transpacific Industries of 8.4%, and Platinum Australia of 8.1%.

Energy stocks increased after crude oil price advanced $2 to $58.2 per barrel. Paladin Energy jumped 7.5% and Oil Search edged up 7.4%.

Pharmaceutical stocks soared as well. Sonic Healthcare gained 7.2%.

Incitec Pivot Ltd. led decliners in the ASX 200 index shares with a fall of 27.5% followed by losses in Babcock & Brown of 25.6%, in Timbercorp Ltd. of 15.7%, in Babcock & Brown of 13.5%, and Macquarie Communications of 12.1%.

Company News

Australia & NewZealand Banking Group Ltd. will eliminate 500 jobs to control costs. The lender plans to double its earnings by 2012 through acquisitions in emerging markets across Asia.