Consumer Confidence Falls in Australia

123jump.com Staff
11 Feb, 2009
New York City

The latest read on consumer confidence index in Australia showed a decline in February. Weak job market and falling home values contributed to the consumer anxieties. In trading, stocks edged lower with weakness in financials and miners.

[R]3:00AM New York, 7:00PM Sydney- Australian consumer confidence index declines 4.6% in February.[/R]

Australian market averages fell marginally after the consumer confidence dropped in February. Losses were trimmed by news home loan approvals increased in December.

In Sydney trading ASX 200 index slipped 0.4% or 14.3 to 3,474.40.

Of the ASX index stocks, 69 increased, 117 declined, and 14 were unchanged. EMECO led advancers in the index shares with a rise of 5% followed by Babcock & Brown gaining 11.4%.

Consumer Confidence Drops 4.6% to 85.8 in February

Westpac Corp. reported today that the Westpac-Melbourne Institute Index of Consumer Confidence dropped 4.6% to 85.8 in February from 89.9 in January despite the announcement of a A$42 billion stimulus package by the government and the 100 basis points interest rate cut by the Reserve Bank of Australia.

Notwithstanding the transmission of mortgage rates by banks, consumer confidence was 7% below the level of confidence following the first rate cut in the cycle.

Petrol prices increased 13.3% in the last three weeks.

The current conditions index, which gauges households assessment of their conditions, advanced 3.9% in February, while the expectations index- a measure of household expectations- fell 10.5%, indicating that households are fearful of the future.

Westpac Corp. projects that household savings will rise from 1.5% in 2007 to 8% in 2009 as balance sheets are perceived to be too weak to withstand the adverse effects of falling house prices and unemployment.

According to the report, the index measuring how family households assess family finances rose 1.6%, and whether now is a good time to buy a major household item gained 5.8%.

Assessments for family finances over the next 12 months fell 6.2% and outlook for economic conditions over the next year dropped 7.6%.

The index of whether now is a good time to buy a house increased 7%.

Westpac says it expects the Reserve Bank of Australia to cut its key rate by 0.75% at its next meeting on March 2.

Home Loan Approvals Rose 6.4% in December

The Australian reported today that the country''s owner-occupied housing finance rose a seasonally adjusted 6.4% in December, rising the most since May 2000. Interest rates have been lowered 300 basis points from September to December.

Total value of housing finance increased 5.9% to A$18.6 billion in December, compared with a rise of 0.8% in the previous month. The report notes that the value of investment housing loans advanced 2.9% to A$5.1 billion.

Gainers & Losers

EMECO Holdings led advancers in the ASX 200 index shares with a rise of 5% followed by increases in Babcock & Brown of 11.4%, in Computershare Ltd. of 10.4%, in NRW Holdings of 8.9%, and Australand Properties of 8.7%.

PMP Ltd led decliners in the ASX 200 index shares with a drop of 19.2% followed by losses in Asciano Group of 15.5%, in Bradken of 9.8%, in Paperlinx of 8.8%, and ING Industrial of 8.3%.

Energy stocks fell after crude oil prices dropped 2.1% to $37.6 per barrel. Copper prices also dipped 1.6%. Equinox Mine-CDI fell 7.7%, Nexus Energy shed 5.2% and Sundance Resources plunged 5.2%.