Leading Indicators Index in Australia Up

Darlington Musarurwa
18 Nov, 2009
New York City

The leading indicators index in Australia rose 5.8% in September. The RBA plans to ease acceptance of mortgage loans based securities as collateral. Agribusiness AWB Limited reported full year net loss of A$250.8 million on revenues increase of 7% to A$6.69 billion.

[R]3:00 AM New York, 7:00 PM Sydney - Australia’s leading index rising 5.8% in September. The RBA plans to ease acceptance of mortgage loans based securities as collateral.[/R]

Australian stock indexes rose marginally as commodity stocks were mixed. Crude oil prices advanced 0.4% to $79.2 per barrel and gold prices were unchanged at $1,139 an ounce.

Investor sentiment was spurred by expectations the country economic activity is likely to rise markedly in the next three to nine months, according to a government report.

In Sydney trading ASX 200 Index rose 0.2% or 9.6 to 4,739.00.

Of the ASX 200 index stocks, 90 rose, 91 declined, and 19 were unchanged. Linc Energy led gainers in the index shares with a rise of 12.9% as crude oil prices increased 0.4% to $79.2 per barrel.

Other energy stocks gained. Beach Petroleum soared 3.1% to A$0.84 and Roc Oil jumped 3% to A$0.68.

The Aussie fell 0.2% to 92.82 against the U.S. dollar.

Leading Index Rises to 5.8% in September

Westpac- Melbourne Institute Leasing Index, which gauges the likely pace of economic activity three to nine months into the future, rose 5.8% in September from -5.4% in May, rising the most since the mid 1970s.

The index was lifted by U.S. industrial production rising 3.2%, material prices 2.9%, productivity 2.2%, share price index 1.9%, dwelling approvals 1.1%, real corporate profits 1.1% and domestic labour market conditions 0.8%.

The level of the Index gained 0.9% as three of the four monthly components of the index increased, with the ordinaries index climbing 5.9%, dwelling approvals 2.7% and U.S. industrial production 0.7%.

Real money supply contracted 0.4%. The report forecasts economic activity to surge from 17.5% to 4% in 2010.

However, Reserve Bank of Australia estimates the economy will expand 3.25% in 2010.

Westpac chief economist Bill Evans expects the central bank to increase its key rate by 25 basis points at its next meeting on December 1.

“With no meeting in January and the Bank committed to gradual increases a modest 0.25% increase appears to be the most likely outcome,” said Evans.

RBA Relents Acceptance of RMBS as Collateral

Reserve Bank of Australia Assistant Governor said in a speech today the Bank will maintain residential mortgage backed securities as eligible collateral

“However, with the improvement in funding conditions, we generally no longer expect or wish to see internal securitisations offered as collateral our market operations on a regular basis,” said Belle.

AWB Reports Full-Year Loss of A$250.8 million

The agribusiness AWB Ltd reported a full year loss of A$250.8 million from a profit of A$64.3 million in the comparable year ago period. Revenues in the period increased 7.1% to A$6.69 billion.

The company was dragged by discontinued businesses ZWB Brazil and Hi-Fert, including goodwill impairment for its Landmark Financial Services division.

Gainers & Losers

Linc Energy led gainers in the ASX 200 index shares with a rise of 12.9% followed by increases in Arrow Energy of 7%, in Aquila Resources of 5.6%, in Orica Ltd. of 3.4%, and APN News & Media of 3.4%.

ING Industrial led decliners in the ASX 200 index shares with a decline of 8.5%, in Minara Resources of 6.1%, in Abacus Property of 5.6%, in Macarthur Coal of 4.7%, and Macquarie Office of 4.7%.

Other commodity stocks dropped. Onesteel Ltd. Fell 2.6% to A$3.03 and Murchison Metals declined 2% to A$1.76.

Other Movers

Abacus Property Group in investment in commercial, retail and industrial properties declined 5.6% to A$0.42.

AWB Limited decreased 0.4% to A$1.25 after the grains marketer said full-year revenues rose 7% to A$6.69 billion. Net loss for the full-year was A$250.8 million or A$69.6 per diluted share compared to net profit of A$60.3 million or A$17.6 per share a year ago.

BHP Billiton plc advanced 0.2% to A$40.60 after the natural resources company said commodity restocking in OECD countries is lethargic to date, Marius Kloppers, Chief Executive of the company said on Wednesday.

Insurance Australia Group Limited added 2.3% to A$4.01 after shares gain in Sydney on QBE takeover speculation.

ING Industrial Fund the investing in real estate fell 8.5% to A$0.43.

QBE Insurance Group Ltd rose 2.5% to A$23.01.

Linc Energy Ltd surged 12.8% to A$1.71 after the exploration for coal resources said an initial resource statement in accordance with the JORC Code of 7.8 billion tonnes of coal at its Galilee tenement in Queensland.

Macarthur Coal Limited declined 4.7% to A$9.70 after the exporter of pulverized coal expects profit for the first half of 2010 to be between A$30-A$38 million.

Minara Resources Limited the production of nickel decreased 6.1% to A$0.84.