Australian Confidence, Loans Rise; CBH Recap

123jump.com Staff
08 Jul, 2009
New York City

Australian stocks recovered from 1.5% loss after the release of consumer confidence. The home loan approvals increased 2.2% in May as first-time home buyers were encouraged with government grants. CBH Resources announced a recap plan with A$40 million loan from its largest shareholder Toho Zinc.

[R]7:00 PM Sydney – Australian stocks open low but closed higher after the release of consumer confidence data. The home loan approvals increased 2.2% in May as first-time home buyers were encouraged with government grants. CBH Resources announced a recap plan with A$40 million loan from its largest shareholder Toho Zinc.[/R]

In a choppy and volatile trading, Australian stock dropped at its low in the morning and managed to close higher at close. The ASX 200 index at its lowest declined 1.5% and recovered to close up 1 to 3,767.90.

The Australian dollar decreased to 78.31 U.S. cents from the previous close of 79.58 cents.

The home loans approved in May increased 2% to 63,855 according to the latest data released by the Australian Statistics Bureau. The home buyers are encouraged by the government with A$21,000 grant to first time home buyers and record low interest rate of 3% by the Reserve Bank to banks.

The first time home buyers bought 29.5% of all homes sold in the month, an increase from 28.6% in April and 17.2% a year ago.

Consumer confidence index increased 9.3% in July to 109.4 as reported in the survey conducted by Westpac Banking Corp and Melbourne Institute survey. The rise in confidence was linked to the government releasing funds to tax payers and increased spending on roads and railways.

Gainers & Losers

CBH Resources declined 2.5 cents to 11 cents after the company announced a plan to recapitalize the balance sheet, assume $40 million in loans and repurchase some of the outstanding shares. Toho Zinc Co, the largest shareholder of the company has agreed to provide the 3-year loan at 5% fixed interest rate.

Western Areas NL decreased 23 cents to $5.35 after China based company agreed to buy nickel at undisclosed price from the company under two-year contract.

Energy companies declined after international price of crude oil fell below $62 a barrel. Woodside Petroleum decreased 27 cents to $40.20 and Santos edged lower 26 cents to $12.97.

Metals and materials miners declined after prices of copper, zinc and tin fell. BHP Billiton dropped 0.4% to $32.14 and Rio Tinto Limited increased 1.8% to $48.20.

Separately, China arrested executive of Rio Tinto under charges of spying but no specific charges were released.

National Australia Bank increased 42 cents to $22.09, Westpac increased 2 cents to $19.12 and Commonwealth Bank increased 27 cents to $37.26.