Australian Confidence Up, Origin Lowers Earnings

Darlington Musarurwa
09 Jun, 2009
New York City

Australian business confidence increases in May as the government commits A$22 billion to infrastructure spending. JB Hi-Fi Limited lifted its earnings outlook. Origin Energy lowered its annual earnings outlook for the second time this year. Attacks on Indian students in Australia continue.

[R]3:00 AM New York, 7:00PM Sydney- Australian business confidence increases in May as the government commits A$22 billion to infrastructure spending. JB Hi-Fi Limited lifted its earnings outlook. Origin Energy lowered its annual earnings outlook for the second time this year.[/R]

Stocks in Australia focused on commodities as crude oil prices fell 0.5% to $68 per barrel and gold prices dropped 1.1% to $952.5 per ounce.

Investor sentiment was also affected after total job ads declined in May according to a private report.

In Sydney trading the ASX 200 Index tumbled 0.9% or 36.3 to 3,934.90. Of the ASX 200 index stocks, 56 rose, 127 declined, and 17 were unchanged.

Australian Business Confidence Rise in May

National Australia Bank reports that the sentiment index, which gauges business confidence, gained 12 points to -2 in May, rising the most in eight years. Pessimists however still outnumber optimists.

The government stimulus of A$22 billion from the federal budget will be used to build schools, roads and railways.

Australian Job Adverts Drop 0.2% in May

ANZ Bank reported today that the country’s total job adverts in major metropolitan newspapers and on the Internet fell 0.2% in May to a weekly average of 136,457 per week.

Job advertisements in major metropolitan newspapers declined 1% to an average of 8,123 per week in May after gaining 3.1% the previous month.

Newspaper ads also declined 52.5% from the same period a year ago, with ads in Queensland falling 4.9%, Northern Territory 4.5%, New South Wales 1.5%, Western Australia 0.8%, Victoria 0.4%, and the ACT 0.1%.

However Tasmania rose 12.5% and South Australia advanced 7.8% in the review period.

The ANZ notes that Internet job advertisements shed 0.2% to 128,334 per week, falling 48.8% from the comparable year-ago period.

ANZ Head of Australian Economics Warren Hogan said, “In recent months we have seen the first evidence of stabilization in job advertising in Australia. An ongoing stabilization of job ads followed by evidence of recovery will likely be one of the first signs that the worst is over in the broader Australian economy.”

Aussie Falls

The Australian dollar shed 0.2% to 78.72 against the dollar in today’s trading.

Gainers & Losers

JB Hi-Fi Limited increased 5.1% to $14.17 after it revised its annual earnings estimate to A$92 million from its previous concurrence with analyst estimates of A$87.1 million and annual sales are expected to surge 26% to A$2.3 billion. The company has benefited from the government stimulus package. The company plans to expand number of stores to 210 from the current total of 105.

Felix Resources fell 9% to A$13.01 after gold prices dipped 1.1% to $952.5 per ounce.

Origin Energy Ltd decreased 3.7% to A$14.45 after it cut its top end of the annual earnings forecast. The second largest energy utility company said that it is unlikely to meet its February estimate of annual earnings rise of 20% after it lowered from the previous forecast of a rise of 40%.

Its New Zealand subsidiary, Contact Energy yesterday estimated underlying profit to fall 33% on record hydro dam inflows in South Island.

Centennial Coal declined 8.5% to A$2.49 as commodity stock retreated on worries over the health of the global economy.

ASX 200 Index Movers

Mirvac Group led the decliners in the ASX 200 index of 10.5% followed by losses in GPT Group comprises General Property Trust of 10.3%, in Felix Resources Limited of 9.0%, in CSR Limited of 8.9% and in Centennial Coal Company Limited of 8.4%.

Boart Longyear Group led gainers in the ASX 200 index with a rise of 14.2% followed by gains in AJ Lucas Group Limited of 7.6%, in Macquarie CountryWide Trust of 7.6% and Roc Oil Company Limited of 6.9%.

Student Attacks

In Sydney and Melbourne attacks on Indian students continued despite the assurance by Prime Minister Rudd and Deputy Prime Minister Julia Gillard.

Australia has 90,000 students from India, second after 130,000 students from China.

Prime Minister of India today stated that he is “appalled” by some of the racially motivated attacks in Australia and said that Prime Minister Rudd has assured him of the safety of Indian students.

Despite assurances, stacks continue on Indian students and Sydney and Melbourne have yet to convict a single person. More than 2,500 attacks have been registered against Indian students in last one year in Australia.