Australian Consumer Confidence Declines

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

Australian confidence dips to low as hopes of economic recovery fades and home prices decline in December. The recent fall in fuel prices dragged the inflation lower but consumer confidence remains low. Despite a rise in crude oil and commodities prices, stocks declined.

[R]3:00AM New York, 7:00PM Sydney - Australian consumer confidence dips 2.2% to 89.9 in January.[/R]

Stocks in Australia declined 1% after a report showed that the country’s consumer confidence dipped in January, re-igniting fears that the country will slip into a recession.

Resource stocks however pared losses as crude oil and metal prices advanced.

In Sydney trading ASX 200 index fell 1% or 33.8 to 3,442.80.

Of the ASX 200 index stocks, 70 gained, 114 declined, and 16 were unchanged. Minara Resources led gainers in the index shares with a rise of 15.4 % after gold prices jumped $15.30 to $855.2 per ounce.

Crude oil prices also increased $2.23 to $38.7 per barrel.

Other commodity stocks rose. Lihir Gold jumped 6.9% and Nexus Energy climbed 6.4%.

Australia’s Consumer Confidence Plunges 2.2% in January

Westpac Corp. reported today that the Westpac-Melbourne Institute Index of Consumer Confidence dropped 2.2% to 89.9 in January from 92 in the previous month.

The report noted that the initial 12.1% rally in sentiment in the period on the aggressive interest rate cuts by the central bank and fiscal bonus payments is starting to fade.

The component index dropped 18.4% to 58.3 in January as consumers increasingly become pessimistic about the country’s economic outlook.

However the index of family finances soared 10.6% in January on falling fuel prices, interest rate cuts and the government’s stimulus package.

Sentiment towards the purchase of household items declined marginally by 3.5% in January after rising steeply in the November-December period but sentiment towards buying a car jumped 6.2%.

In addition, the survey said responses to questions whether now is a good time to buy a house rose 0.7% to 137.3 in January.

Westpac forecasts that the Reserve Bank of Australia will slash rates by 0.5% to 3.75% at its February 3 meeting and to lower the key rate to 2.75% by June

Westpac senior economist Matthew Hassan said, “Under these circumstances, generating a sustained upturn in domestic demand is difficult enough for policy makers let alone generating one strong enough to offset such a large external shock.”

ASIC Extends Short Selling

Australian Securities Investment Commission said it has extended the ban of short selling, which was supposed to lapse on January 27, to March 6 after lobbying from banks and other industry groups.

ASIC is concerned about the lingering turbulence on the global financial markets.

Gainers & Losers

Minara Resources led gainers in the ASX 200 index shares with a rise of 15.4% followed by gains in Karoon Gas Australia of 10.8%, in Abacus Property of 9.8%, in Independence Group of 9% and Newscrest Mining of 8.2%.

PanAust led decliners in the ASX 200 index shares with a fall of 13.5% followed by losses in HFA Holdings of 10.5%, in Transpacific Industries of 9.2%, in Asciano Group of 8.6%, and NRW Holdings of 7.5%.