Australian Sentiment Index Falls; Aussie Firm

Darlington Musarurwa
11 Nov, 2009
New York City

Consumer sentiment index in Australia drops 2.5% in November. AMP urges Axa Asia Pacific Holdings to reconsider A$11 billion bid. Australian regulators approve Woolworth takeover of Danks. The Aussie dollar trades near the high of the year.

[R]3:00AM New York, 7:00PM Sydney - Australia’s consumer sentiment drops 2.5% in November. AMP urges Axa Asia Pacific Holdings to reconsider A$11 billion bid. ACCC approves Woolworths’ takeover of Danks. The Aussie dollar trades near the high of the year.[/R]

Australian stocks rose 0.5% despite consumer sentiment falling in November, according to a private report.

In Sydney trading ASX 200 Index rose 0.5% or 23.4 to 4, 757.00.

Of the ASX 200 index stocks, 102 gained, 82 fell, and 16 were unchanged. Lynas Corp. led advancers in the ASX 200 index stocks with a rise of 11.6% followed by Mirvac Group gaining 6.8%.

The Aussie fell 0.1% to U.S. 92.99 cents.

Consumer Sentiment Declines 2.5%

The Westpac-Melbourne Institute index of consumer sentiment dropped 2.5% to 118.3 in November from 121.4 the previous month.

All components of the index fell, with the index of family financing dropping 4%, economic conditions over the next 12 months 2.5%, economic conditions over the next five years 3.7%, good time to buy major household items 1.2% and family finances compared with a year ago 0.7%.

The current conditions index declined 1%.

Petrol prices rose 2.3% and shares prices plunged 3.3% further affecting sentiment.

Westpac chief economist Bill Evans said, “Given that this fall comes after the second successive increase in the Reserve Bank overnight cash rate and associated increases in variable mortgage rates it has to be classified as a modest response.”

Westpac bets the Reserve Bank of Australia will hike its key rate by 25 basis points when it meets on December 1.

AMP Urges Axa Asia to Reconsider A$11 billion Bid

AMP Ltd. chief executive officer Craig Dunn told ABC Radio today Axa Asia Pacific Holdings to reconsider its rejection of the A$11 billion bid for the company on the back of a 9.5% gain in the company’s stock since Monday.

Australia biggest asset manager’s bid is a cash and equity offer.

“That premium has gone higher as the AMP stock price has gone higher over the last couple of days; in our view that warrants serious consideration by the independent directors,” said Dunn.

ACCC Approves Woolworths’ Danks Takeover

The Australian Competition and Consumer Commission has approved the acquisition of Danks Holdings Ltd. And its joint venture U.S. partner Lowe’s.

According to ACCC, the acquisition will not “result in a substantial lessening of competition.”

Woolworth’s and Lowe’s plan to create “big box” home improvement stores that are dominant in the hardware sector.

Through the deal, Woolworths will purchase Danks, a wholesale distributor of hardware products and related services and those retailers trading under the Home Hardware and Thrifty-Link banners.

Gainers & Losers

Lynas Corp. led advancers in the ASX 200 index stocks with a rise of 11.6% followed by increases in Mirvac Group of 6.8%, in Dexus Property of 6.3%, in ING Office Fund of 6.3%, and Stockland of 6%.

Emeco Holdings led decliners in the ASX 200 index stocks with a drop of 4.4% followed by losses in Atlas Iron of 3.8%, in Virgin Blue Holdings of 3.7%, in Equinox Mine-CDI of 3.2%, and Western Areas NL of 3.2%.

Commodity stocks fell as crude oil prices slid 1.4% to $78.3 per barrel. Centennial Coal slipped 2.9% to A$3.36, Energy Resources Australia plunged 2.6% to A$24 and Mincor Resources declined 2.4% to A$2.05.

Other Movers

AED Oil Limited decreased 0.8% to A$0.57.

Atlas Iron Limited the operator of the Pardoo iron ore mine dropped 3.7% to A$1.79.

Emeco Holdings Limited declined 4.4% to A$0.86.

Equinox Minerals Limited the resource company engaged in mining and exploration of mineral properties in Zambia slipped 3.1% to A$3.95.

Fox Resources Limited the exploration for base metals and iron ore, and the mining added 4.0% to A$0.26.

Lynas Corporation Limited surged 11.5% to A$0.53 after the design and construction of a concentration plant has now received the full amount of A$450 million less expenses pursuant to the equity raising announced on September 29, 2009.

Mirvac Group the real estate investment, development, investment management and hotel manager rose 6.8% to A$1.57.

Nexus Energy Limited advanced 2.9% to A$0.35 after the oil and gas company expects the Longtom gas project to provide the company stable cash flow over the next ten plus years, with a forecast pre-tax cash flow of around A$70 million per annum based on 25 PJ per annum of gas sales.

Virgin Blue Holdings Limited fell 3.7% to A$0.51.