Rates May Rise in Australia; Leighton Surges

Darlington Musarurwa
14 Aug, 2009
New York City

Governor Stevens of the Reserve Bank of Australia may tighten the rates from the historic lows nearly ten months ago. Australian dollar gained in the backdrop of comments and rising sentiment in the stock market. Leighton surged after positive earnings outlook. PMP reported annual loss.

[R]1:00AM New York, 6:00PM Sydney- Governor Stevens of the Reserve Bank of Australia may tighten the rates from the historic lows nearly ten months ago. Australian dollar gained in the backdrop of comments and rising sentiment in the stock market. Leighton surged after positive earnings outlook. PMP reported annual loss. New Zealand retail sales rise 1.1% in June.[/R]

Australian market averages advanced after world commodities prices gained and resource stocks in Asia closed higher.

The Reserve Bank of Australia intimated that the central bank will consider adjusting interest rates upwards after they were dropped to “emergency” level to sustain the economy against a sharp drop in world financial markets.

Crude oil prices advanced 0.5% to $70.5 a barrel and gold prices advanced 0.4% to $956.50 per ounce.

In Sydney trading ASX 200 Index increased 0.6% or 25.1 to 4,461.00 and Australian dollar jumped to 84.28 U.S. cents.

The yield on 10-year bonds closed at 5.618% and for 3-year bonds maturing in 2012 at 4.964%.

Of the ASX 200 index stocks, 107 rose, 80 dropped, and 13 were unchanged. Nexus Energy Ltd. increased 20.3% after crude oil prices rose 0.5% to $70.5 per barrel.

RBA to Adjust Interest Rates

Reserve Bank of Australia Governor Glenn Stevens said today in a semi-annual speech to the House of Representatives Standing Committee on Economics that the central bank might soon reconsider “adjusting interest rates back towards normal levels.”

Stevens said the recession might prove to be the shallowest the country has ever experienced as growth remains propped by demand principally from China.

He suggested that at least variable rates will inch higher from the historic lows.

NZ Retail Sales Rise 1.1% in June

Statistics New Zealand reported today that the country’s total retail sales advanced 1.1% in the three months to June in seasonally adjusted terms from a fall of 1.4% in the three months to March.

Sales volumes increased 0.4% in the period, increasing for the first time since September 2007.

Core retailing, excluding vehicle-related industries gained 1.1% in value and 0.2% in volume.

Sales values soared on supermarket and grocery stores 2.3%, motor vehicle retailing 3%, while sales volumes advanced on appliance retailing 3.1% and automotive fuel retailing 2.8%.

However, ''other retailing'' industry, which includes antique and used goods, garden supplies, flowers, and jewelry retailing, had the biggest offsetting decreases in both the value and volume of sales.

For the month, total retail sales were flat at 0.1% and core retailing fell 0.4%. Clothing and soft goods dropped 9.1% after they had gained 12.7% in May.

New Zealand House Price Rise 1% in July

Real Estate Institute of New Zealand reported today that the country’s Monthly Housing Price Index gained by 1% to 3134.1 in July from the previous month and rose 2.2% in the July quarter.

Prices edged up 0.9% in July from the comparable year-ago period. However, housing prices are 7.3% below their November peak.

In addition, house prices rose in Wellington 4%, Christchurch 0.6%, but fell in Other North Island 4.2% and other South Island 1.6%.

Gainers & Losers

Of the total stocks traded on the ASX, 656 increased, 461 decreased and 337 were unchanged. In trading, 3.15 billion shares changed hands worth $6.9 billion.

Energy stocks advanced after crude oil prices rose 0.5% to $70.5 per barrel. Nexus Energy edged up 20.3%, Sundance Resources 13.1%.

Leighton Holdings surged 7.3% to $33.30 after it reported annual profit declined 28% and predicted to return to earnings to $600 million in the current fiscal year.

PMP Ltd closed unchanged at 55 cents after it reported annual loss of $27.2 million and sales declined 0.1% to $1.35 billion. The printing company earned $78.9 million in the previous year. The company gave weak outlook for the current fiscal year.

Newmont Mining increased 9 cents to $4.91, Lihir Gold decreased 2 cents to $2.60 and Newcrest declined 35 cents to $29.15.

ASX 200 Index Movers

Emeco Holdings Limited led the decliners in the ASX 200 index of 5.8% followed by losses in Macquarie Office Trust of 5.3%, in CSR Limited of 5.1%, in Arrow Energy Ltd of 4.8% and in Transpacific Industries Group Ltd of 4.7%.

Nexus Energy Limited led gainers in the ASX 200 index with a rise of 20.2% followed by gains in Sundance Resources Ltd of 13.8%, in ING Industrial Fund of 12.0% and Centennial Coal Co Ltd of 11.3%.