Australian LEI Falls, David Jones Net Rises

123jump.com Staff
18 Mar, 2009
New York City

Australian index of leading economic activities indicators declined in January as domestic economy shrinks and consumers curtail spending. Retailer, David Jones first half profit increased 2.4%. Metals and mining related stocks declined after prices of gold and copper edged lower.

[R]3:00AM New York, 7:00PM Sydney - Australian leading index falls 3.1% in January. David Jones profit rises 2.4% to A$91.2 million in the first half.[/R]

Australian market averages declined 0.2% after a private report indicated that economic activity in the next three to nine months is likely to deteriorate.

Investor sentiment was also dampened after the World Bank lowered China’s economic growth forecast for this year to 6.5% from an earlier forecast of 7.5%.

Market Sentiment

In Sydney trading ASX 200 index fell 0.2% or 5.6 to 3,446.30.

Of the ASX 200 index stocks, 113 increased, 76 dropped, and 11 were unchanged. Hastings Diversified Utilities led gainers in the index shares with a rise of 22.4%.

Australian Leading Index Drops in January

Australia’s Westpac- Melbourne Institute Leading Index, which measures the pace of economic activity three to nine months into the future, shrank 3.1% in January, markedly below its long term trend of 3.2%.

The annualized growth rate in the Leading Index has fallen 7.1% in five months.

Six of the eight components deteriorated with indexes for corporate profits declining 1.4%, slowing productivity growth 1.4%, share prices 1.1% and dwelling approvals 0.6%.

However, the only positive contribution to the broader index has been from an increase in overtime worked of 0.2%.

According to the report, the level of the Coincident Index dropped by 0.2 percentage points with annualized growth declining from 2.3% in December to 1.8% in January.

Real household income contributed 2 percentage points in January from 2.3 percentage points the previous month on targeted policy measures from the government.

Westpac forecasts that the Reserve Bank of Australia will slash its cash rate by 25 basis points to 3% at its next meeting on April 7 and eventually lower it to 2% in the second half of 2009.

""""""""Indeed more generally the policy response to date suggests that the economy is not heading for the repeat of the early 1990s experience. Both monetary and fiscal policy has been eased aggressively and early,"""""""" said the report.

David Jones Profits Rise 2.4% in H1

David Jones reported today that the company’s profit after tax in the six months ended January 24 increased 2.4% to A$91.2 million from A$89 million in the comparable year ago period as the financial services businesses’ EBIT advanced 7.5% to A$18.4 million.

David Jones chief executive officer Mark McInnes said the company has been able to withstand the deteriorating global economic conditions since the company restructured in fiscal years 2006 and 2007.

""""""""Whilst the current financial circumstances are worse than predicted, our company is well prepared. We have over the past 24 to 36 months taken important steps to transform our Balance Sheet, preserve our strong cash flows and manage the key variables of our business,"""""""" commented McInnes.

Aussie Falls 0.2%

The Australian dollar dropped 0.2% to 66.06 cents against the U.S. dollar.

Gainers & Losers

Hastings Diversified Utilities led advancers in the ASX 200 index shares with a rise of 22.4% followed by increases in Sunland Corp. of 16.3%, in NRW Holdings Ltd. of 12.5%, in GWA International Ltd. of 12.4%, and Australian Wealth of 11.6%.

Macquarie Countrywide led decliners in the ASX 200 index shares with a fall of 9.8% followed by losses in Babcock & Brown of 8.9%, in Energy Resources Australia of 8.9%, in Boart Longyear Group of 8.7%, and Rio Tinto of 8.7%.

Resource stocks plunged after gold prices dipped 0.6% to $916 per ounce. Minara Resources declined 6.9% and Avoca Resources of 6.9%.