Australian Stocks Weak, LEI Rises 0.3%

Darlington Musarurwa
24 Nov, 2009
New York City

Australian stocks declined tracking losses in metals and commodities prices. BHP Billiton is in advanced stages to sell its closed nickel mining operation for as much as $500 million. Woodside lowers its production target in the current year by 7%.

[R]3:00 AM New York, 7:00 PM – Australian stocks declined tracking losses in metals and commodities prices. BHP Billiton is in advanced stages to sell its closed nickel mining operation for as much as $500 million. Woodside lowers its production target in the current year by 7%.[/R]

Australian stocks declined after commodities prices weakened and investors worried of the stretched valuations. BHP Billiton is likely to close the sale of its closed nickel mine as early as this week.

Losses were pared by news the Conference Board’s leading index rose 0.3% to 115.6 in September.

In Sydney trading ASX 200 Index declined 0.7% or 32 to 4,685.00.

Of the ASX 200 index stocks, 62 gained, 122 dropped, and 16 were unchanged. Mincor Resources led advancers in the index shares with a rise of 4.3% as gold prices advanced 1.6% to $1,164 per ounce.

Crude oil prices gained 1.3% to $78.5 per barrel and the Aussie dropped 0.6% to 91.82 against the dollar.

BHP Billiton Ltd is in the final stages of negotiating the sale of its closed nickel and cobalt mining operation at Revensthorpe in Western Australia.

The company expects to sell the mine for at least $500 million according to sources quoted by Bloomberg News.

BHP took $3.6 billion one-time charge to close the mine the fiscal year that ended in June of this year that generated $2.2 billion in revenues and has estimated nickel ore of 235 million tons.

Australia’s Leading Index Rises 0.3% in September

Conference Board’s Leading Economic Index for Australia rose 0.3% to 115.6 in September, rising for the fourth straight month.

The measure also advanced 2.1% in the six month period through September 2009.

Three of the seven components of the index - yield spread, share prices and building approvals - rose, while rural goods exports, money supply, and gross operating surplus dropped.

Sales-to-inventories ratio remained unchanged.

According to the report, the Coincident Economic Index declined 0.1% in September, with three of the four components gaining.

The CEI increases were in employed persons, household gross disposable income and industrial production. However, retail trade dropped in that period.

Woodside Forecasts Oil Production Fall

Woodside Petroleum reported today in an investor briefing it projects its full year oil and gas production will drop to 70 million and 75 million barrels of oil equivalent in 2010.

The company maintained that the production this year will be between 81 million to 86 million of BOE.

Woodside also plans to sell its onshore assets in Libya and review assets in Brazil, Sierra Leone and Liberia.

Woodside Petroleum Ltd. chief executive officer Don Voelte said it has experienced a “mixed but strong start” in its exploration for additional gas for Pluto.

Gainers & Losers

Mincor Resources led gainers in the ASX 200 index shares with a rise of 4.3% followed by increases in Molopo Energy of 4.2%, in FKP Property of 3.4%, in Sundance Resources of 3.3%, and Viterra Inc-CD of 3.1%.

Babcock & Brown led decliners in the ASX 200 index shares with a fall of 99.2% followed by losses in Elders Ltd. of 6.1%, in Commonwealth Property of 4.6%, in SP Ausnet of 4.5%, and Nexus Energy of 4.3%.

Other Movers

Babcock & Brown Infrastructure Group the specialist infrastructure company rose 99.2% to A$4.15.

Commonwealth Property Office Fund rose 4.5% to A$0.94.

Elders Limited the rural and regional company declined 6.0% to A$0.15.

FKP Property Group added 3.4% to A$0.75.

Harvey Norman Holdings Limited added 0.6% to A$4.49 after the electronics retailer said that for first half of 2010, it expects profit before tax and minority interests would exceed the profit from the previous year by 40%.

Mincor Resources NL the nickel producer advanced 4.2% to A$2.07. Minara Resources Limited the nickel producer increased 1.1% to A$0.87.

Molopo Australia Limited rose 4.1% to A$1.62 after the oil exploration company confirmed the settlement of sale of non-operating interest in Liulin, Shanxi Province, China, to Fortune Oil Plc for $6 million.

Toll Holdings Limited added 1.5% to A$8.37 after the air freight and logistics company has successfully tendered for a contract worth more than A$1 billion ($918 million) in revenue over five years to supply moving services to Australia's defense department.

Resource stocks fell on profit taking. Roc Oil plunged 3% to A$0.65, Murchison Metals fell 2.9% to A$1.68 and Fortescue Metals dropped 2.8% to A$4.13.

Iron Ore Holdings Ltd surged 15% to A$1.695 after Rio Tinto said in a statement to the Australian Stock Exchange that it is considering to but part or all of the Iron Valley deposit in Western Australia.