Australian Confidence Weak; Auto Sales Fall

123jump.com Staff
06 Jan, 2009
New York City

Australian stocks rose 1.5% despite the latest read on business conditions showed a weakness last seen 10 years ago. Auto sales dropped 11.3% in December and fell 3.6% in the year 2008. Auto sales are expected to fall 12% in 2009 in Australia.

[R]3:00 AM New York, 7:00PM Sydney- Australia business conditions worsen to 10-year low.[/R]

Australian market averages rose 1.5% led by financial and energy stocks after crude oil prices continued to rise on the continued military assault from Israel.

In Sydney trading ASX 200 index rose 1.5% or 55.7 to 3,742.70.

Of the ASX 200 index stocks, 133 increased, 51 dropped, and 16 were unchanged. Babcock & Brown led advancers in the index shares on the media speculation bankers have agreed on plans to sell assets and raise cash.

Australian Business Conditions at 10-Year Low

The January 2009 ACCI Survey of Investor Confidence indicate that expectations for the first quarter of 2009 is at record lows after plummeting in the three months to December.

Business conditions and sales are at their lowest level in 10 years and profitability is at its lowest in eight years.

The survey notes that forecast for business sales and profitability has dropped into negative territory for the first time in more than a decade.

An index of the Expected Number of Full-Time Employees is at par with the previous levels achieved during the economic slowdown in 2000 and 2001.

National unemployment is expected to be at a record high over the next twelve months and business investment intentions is also at historic lows.

Despite record low interest rate set by the Reserve Bank of Australia, most banks have not passed through all the reductions to customers. Businesses still have tough time in finding capital and banks remain weary in lending.

In addition, the weak demand expectation is a critical impediment on business investment.

ACCI director of industry policy & economics Greg Evans said, “Inflationary pressures are expected to recede over 2009, which presents more room for the Reserve Bank to manoeuvre its monetary policy to further stimulate the Australian economy. Major lenders should see that official interest rate reductions flow to business borrowers and also that tightened lending criteria is relaxed to encourage business investment.”

Australian Car Sales Drop 3.6% in 2008

Federal Chamber of Automotive Industries reported today that official VFACTS data indicate that vehicle sales slipped 3.6% to 1,012,164 units in 2008 from the comparable period a year ago.

However annual sales rose above 1 million units for the second time.

Sales for passenger car segment dropped 6.3% on the year, while SUV sales and heavy commercials declined 1.9% and 3.5% respectively.

December sales declined 11.3% year-on-year to 76,510.

Toyota was Australia''s best-selling brand in 2008 after selling 238,983 units, with 23.6% market share, followed by Holden with 130,338 vehicles or 12.9% of the share and Ford with 104,715 vehicle sales or 10.3% of the share.

FCAI projects that new vehicle sales will decline to 880,000 units in 2009, a 12% fall.

FCAI Chief Executive Andrew McKellar said lower fuel prices, reduced interest rates and addition fiscal measures from the federal government will spur demand.

Gainers & Losers

Babcock & Brown led advancers in the ASX 200 index shares with a rise of 54%b followed by increases in Valad Property of 50.6%, in Babcock & Brown of 23.8%, in Mount Gibson Iron of 14.4%, and Lynas Corp. of 13.8%.

Babcock & Brown rose on swelling speculation it has won approval to sell its assets in order to boost its balance sheet.

Energy stocks gained as crude oil prices advanced $2.47 to $48.8 per barrel. Paladin Energy gained 13.2%, Minara Resources soared 11.9% and Panoramic Resources increased 8.2%.

Macquarie DDR led decliners in the ASX 200 index shares with a drop of 13.6% followed by losses in Leighton Holdings of 11.8%, in Lihir Gold of 9%, in Abacus Property of 7.3%, and Independent Group of 5.9%.

Lihir Gold fell after gold prices slipped $21.70 to $857.8 per ounce.