Australian Stocks Plunge 4.1%

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

Stocks in Australia plunged on the growing worries of widening recession and rising expectations of higher unemployment. Former RBA governor Fraser estimated that the current recession will be deeper and last longer than the previous recession. Unemployment rate is expected to cross 6% in 2009.

[R]3:00AM New York, 7:30 PM Sydney – The current recession in Australia is expected to be longer and sever and the RBA is expected to slash interest rate down to 2% form the current 4.5% at the next meeting in the first week in February.[/R]

Australian stocks dipped after former Australian Reserve Bank governor Bernie Fraser said that the current recession will be deeper and longer than the previous recession.

A private report also indicated that the anxiety over unemployment surged to the most since November 1982 in January.

In Sydney trading ASX 200 index fell 4.1% or 144.1 to 3,342.70.

Of the ASX 200 index stocks 14 gained, 179 declined, and 7 were unchanged. Paperlinx led gainers in the index shares with a rise of 7.2% followed by MacMahon Holdings increasing 3.2%.

Australia’s Recession to Be Deeper and Longer

Former Reserve Bank of Australia governor Bernie Fraser said today that the country’s recession will be deeper and longer than the last recession in 1991.

Fraser forecasts that the Reserve Bank will slash the key rate to less than 2% from 4.25% when it meets on February 3 and unveil additional stimulus measure to prevent the economy from falling. The forecast was first reported on Bloomberg News.

Fraser said, “The government’s language has been all doom and gloom; we’re talking ourselves into this recession. People are not about to spend their stimulus, which is exactly what needs to happen for confidence to improve.”


Unemployment Expectations Rise 2.2% in January

Westpac Corp. reported today that the Westpac-Melbourne Institute unemployment expectations index jumped to 180.7 in January, as anxiety of job losses grew to the previous recessionary levels in November 1982.

The index of unemployment expectations has increased 5% this month.

Westpac forecasts the jobless rate will soar to 6% this year from 4.5% a year ago.

Gainers & Losers

Paperlinx led gainers in the ASX 200 index shares with a rise of 2.9% followed by increases in MacMahon Holdings of 3.2%, in Duet Group of 2.3%, in Macquarie Media of 1.8%, and Telstra Corp. of 1.7%.

Valad Property led decliners in the ASX 200 index shares with a fall of 44.1% followed by losses in SIMS Metal Management of 20.5%, in Boart Longyear Group of 19.1%, in Babcock & Brown of 18.4%, and Linc Energy of 14.4%.

SIMS Metal Cut H1 Profit Forecast by 36%

SIMS Metal announced today that it will cut its first half profit forecast for the year ending December by 36% to $90 million and A$95 million from a November projection of A$120 million to A$140 million.

The company said first half result might be adjusted to include non-cash charges, related to investments such as goodwill or other identifiable intangibles.

SIMS Metal fell after the company cut its interim profit forecast by 36%.