Sydney Stocks Fall 3.6%, Macquarie Net Drops 43%

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

Stocks in Australia dropped on the weak global financial markets and declining economic growths in EU, Japan, China and the U.S. Citi Australia will cut its staff from the current 2,500. Australian stocks fall on recession worries. Macquarie Group profit in the first half dropped 43%.

[R]3:00AM New York, 7:00PM Sydney – Stocks in Australia dropped on the weak global financial markets and declining economic growths in EU, Japan, China and the U.S. Citi Australia will cut its staff from the current 2,500. Australian stocks fall on recession worries.[/R]

Stocks in Australia declined 3.6% led by financial and commodity stocks on fears of weakening global demand and Japan in recession.

In Sydney trading ASX 200 index fell 3.6% or 129.8 to 3,523.20.

Of the index stocks 28 rose, 163 declined, and 9 were unchanged. Macquarie Group led advancers in the index shares with a rise of 16.5% after the 43% drop in interim profit was less-than-forecasted.

Citi Australia to Cut Staff

The Canberra Times reported today that Citi Australia will cut part of its 2,500 staff, mostly in Sydney and Melbourne, as part of the U.S. lender’s plan to slash 52,000 jobs worldwide to around 300,000.

Citigroup’s head office in Sydney says the reduction will however be small.

Group chief executive Vikram Pandit said yesterday the bank will reduce its headcount by 14% in the near term and cut expenses by 20%.

Already 23,000 jobs have been cut by the end of September.

Pandit forecasts annual expenses will slid to US$50 billion next year from US$62 billion this year.

RBA cut Rate on Deteriorating Financial Conditions

Reserve Bank of Australia today published the minutes of meeting on November 4 that the aggressive 75 basis point reduction in the key rate this month will “strike the right balance” between the central bank’s balancing act to bring inflation within its target range and sustain the demand.

The RBA said the intervention will enable significant reduction in borrowing costs and ultimately lead to the restoration of both consumer and business confidence.

In addition, the members of the rate committee viewed the recent reductions in interest rates on loans, the depreciation of the exchange rate and the A$10.4 billion fiscal stimulus announced in October as insufficient to forestall the adverse impacts of the deteriorating global economy on the domestic market.

Gainers & Losers

Macquarie Group led advancers in the ASX 200 index shares with a rise of 16.5% followed by increases in Macquarie Infrastructure of 9.4%, in Macquarie Communications of 5.9%, and Macquarie Countrywide of 3.8%, and Wesfarmers Ltd. of 3.5%.

Macquarie Group rose after the company reported forecast-beating profit in the six months ended September 30.

Babcock & Brown led decliners in the ASX 200 index shares with a rise of 24.4% followed by increases in Gud Holdings Ltd. of 19.6%, in HFA Holdings of 18.9%, in Babcock & Brown of 14.8%, and Asciano Group of 14.4%.

Commodity stocks fell as gold prices fell to $742 per ounce, while oil prices lost $2 to $55 per barrel. Fortescue Metals shed 13.2%, Oz Minerals plunged 12.1%, Acquarius Platinum slid 10.3% and Murchison Metals fell 8.8%.

Earnings Review

Macquarie Group reported today that profit in the first half ended September 30 declined 43% to A$604 million from A$1.06 billion in the same period a year before. Operating income declined 37% to A$2.97 billion.

The company declared an interim dividend of A$1.45 per share.

Assets under management soared 7% to A$239 billion as of September 30 from a year ago and cash and liquid assets increased to A$26.3 billion, 34% of the group’s net funded assets.

The company had A$197 million impairment charge on the sale of Italian mortgages portfolio.