Australia Trade Deficit Grows; Fewer Home Loans

Darlington Musarurwa
09 Dec, 2009
New York City

Mortgage loans in Australia fell 1.4% in October to A$23.3 billion and trade deficit in the month grows to A$2.4 billion. Preliminary estimate of consumer confidence falls 3.8% in December.

[R]3:00 AM New York, 7:00 PM Sydney – Mortgage loans in Australia fell 1.4% in October to A$23.3 billion and trade deficit in the month grows to A$2.4 billion. Preliminary estimate of consumer confidence falls 3.8% in December.[/R]

Australian market averages slumped on continued weaknesses in commodity stocks as gold prices tumbled 1.8% to 1,143 per ounce and crude oil prices fell 1.3% to $73 per barrel.

Investors also worried as home loans dropped and the trade deficit widened in October, according to two separate government reports. Australian consumer confidence also dropped, however less-than-forecasted in December.

In Sydney trading ASX 200 Index fell 0.7% or 32.7 to 4.637.90.

Of the ASX 200 index stocks, 57 rose, 136 declined, and 7 were unchanged. Cudeco Ltd. led gainers in the index shares with a rise of 5.5%.

The Australian dollar gained 0.3% to 90.61 U.S. cents.

House Loans Fall 1.4% to A$23.3 billion in October

Australian Bureau of Statistics reported today the total value of dwelling finance commitments, excluding alterations and additions fell 1.4% to A$23.3 billion in October from the previous month.

Owner occupied housing declined 0.7% to A$17.2 billion in the period and investment housing fixed loans fell 0.6% to A$6.1 billion.

The ABS notes that the number of commitments for owner occupied housing decreased 1.4% to 63,865, while commitments for construction dwellings gained 9.2% to 8,016 units.

Loans for the purchase of new dwellings dropped 3.9% to 2,618 and purchase of established dwellings plunged 2.8% to 53 232.

Trade Deficit Rises in October

Separately the statistics bureau noted that the balance of goods and services deficit rose A$534 million from the previous month to A$2.4 billion in October.

Exports dropped 3% to A$19.5 billion, with non-rural goods declining 3%; coal, coke and briquettes component 12%; metal ores and minerals component 7%; rural goods 8% and non-monetary gold 17%.
Other mineral fuels gained 18%. In addition, service exports advanced 1%.

According to the bureau, imports also dropped 1% to A$21.9 billion as intermediate and other merchandise goods falling 3%; fuels and lubricants component 10%; down non-monetary gold 9%, consumption goods 1%.

Capital goods, however, rose 1% and services imports edged up 2%.

Australia Consumer Sentiment Falls 3.8% in December

The Westpac Melbourne Index of Consumer Sentiment dropped 3.8% in December to 113.8 in December.

All the components of the index gained, with the assessment of Current Conditions plunging 2.1%, Expectations 4.9%, Responses on “Family finances compared to a year ago 1.9%, whether now is a good time to buy a major household item 2.3% and five year economic outlook 1.4%.

Confidence amongst those with mortgages fell 8.9% and confidence of those who were renting gained 1.6%. Confidence for those owning their homes decreased 4.1%.

The report notes that the share market gained 2.4% and petrol prices jumped 0.7%.

Westpac chief economist Bill Evans said the measure dropped modestly.

“This is a surprisingly modest fall in the Index give recent developments on interest rates,” said Evans.

Gainers & Losers

Cudeco Ltd. led gainers in the ASX 200 index stocks with a rise of 5.5% followed by increases in Karoon Gas Australia of 3.5%, in Extract Resources of 3.4%, in Mount Gibson Iron of 2.7%, in Challenger Financial of 2.7%.

Alesco Corp. led decliners in the ASX 200 index stocks with a fall of 8.7% followed by losses in Avoca Resources of 7.1%, in St Barbara Ltd. of 6.2%, in Dominion Mining of 5/9%, and AJ Lucas Group of 5.7%.

Other Movers

Alesco Corporation Ltd declined 8.7% to A$4.49 an industrial brands business estimated a 29% drop in the first half operating earnings from a year ago to A$30 million.

Avoca Resources Limited the gold miner fell 7.0% to A$1.84 after gold declined nearly 2% and fell more than 10% in the last ten days of trading.

Australia and New Zealand Banking Group Limited declined 1.9% to A$21.51 after the lender is expected to sell bonds to U.S. based investors.

CuDeco Limited the mineral explorer added 5.5% to A$5.17.

Harvey Norman Holdings Limited fell 2.6% to A$4.12.

Karoon Gas Australia Ltd rose 3.4% to A$8.40 said Wednesday that ConocoPhillips has exercised an options to acquire an extra 9% interest in some exploration permits offshore Western Australia state.

St Barbara Limited the gold miner dropped 6.1% to A$0.30.

Woodside Petroleum Ltd decreased 2.1% to A$47.17 after a joint venture between Clough and Amec is primed to start a new two year contract providing offshore maintenance services for company’s Australian oil and gas assets.

Woolworths Limited decreased 1.7% to A$26.96 and the retailer is in bidding war with Tabcorp to acquire to the pub operator National Leisure & Gaming.