Australian Sentiment Index Up; BHP Ore Output Up

Darlington Musarurwa
20 Jan, 2010
New York City

Australia

[R]3:00 AM New York, 7:00 PM Sydney- Australia’s consumer sentiment index rises 5.6% in January. BHP Billiton iron ore production rises to record in the second quarter ending in December as the Chinese demand grows. The Australian dollar closed at 91.67 U.S. cents.[/R]

Australian stock averages closed fractionally higher and consumer confidence in January gained according to the private report. Economists estimate that the unemployment rate has peaked and business conditions will recover.

Reserve Bank of Australia is also expected to hike the benchmark interest rate by 0.25% when it meets on February 2.

In Sydney trading ASX 200 Index rose 0.14% or 7 to 4,868.20.

Of the ASX 200 index stocks 114 gained, 65 fell, and 21 were unchanged. Map Group led gainers in the index shares with a rise of 6.5% followed by Virgin Blue Holdings gaining 5.9%.

The Australian dollar decreased 0.7% to 91.67 US cents.

Australia Consumer Sentiment Rises 5.6%

Westpac-Melbourne Institute Index of Consumer Sentiment jumped 5.6% to 120.1 in January from 113.8 the previous month as confidence of those who hold a mortgage rose to the highest since 1994 at 16.7%.

Four out of five of the components of the index increased, with “the assessments of family finances compared to a year ago” rising 5.2%; expectations about family finances “over the next 12 months” 10.5%; expectations “for economic conditions over the next 12 months 6.8%.

Opinions on whether now is a “good time to buy to buy a major household item” also advanced 7.7%.

However, expectations for “economic conditions over the next five years” dropped 2.1%. The benchmark index for stocks also gained 4.2% and petrol prices jumped 4.4%.

Westpac notes that the unemployment rate has peaked.

The report notes that the Reserve Bank of Australia is likely to increase its key interest rates by 0.25% to 4.5% when it meets on February 2.

“However, it is likely that the most important fillip to confidence in the month was the continuation of positive surprises on the employment situation,” said Westpac chief economist Bill Evans.

BHP Record Iron Ore Production

BHP Billiton reported in its exploration and development report for the first half ended December 31 that the miner recorded record iron ore production to satisfy growing Chinese demand.

Production in the December quarter edged up 11% to 32.45 million tons and output of petroleum increased 16% to 38.4 million barrels of oil equivalent.

Uranium production from Olympic Dam was, however, 60% lower on repair work on the damaged main ore-transport shaft.

Growth in iron ore production and shipments was helped by improvements in rail and port infrastructure under the Western Australia Iron Ore Rapid Growth Project 4.

According to the report, the RPG4 is expected to reach full capacity by the end of 2011.

In addition, 54% of Western Australia iron ore shipments - on a wet metric ton basis - were based on annually agreed pricing, and the remainder had been sold on shorter-term reference pricing, while the spot price of iron ore production has risen to 90% above the current benchmark.

ASX Movers

Minara Resources Limited led the decliners in the S&P ASX 200 index with a loss of 5.4% followed by losses in PanAust Limited of 4.2%, in Carsales.com Ltd of 4.2%, in James Hardie Industries N.V 3.4% and in ING Industrial Fund 3.1%.

Macquarie Airports led gainers in the S&P ASX 200 index with a rise of 6.5% followed by gains in Virgin Blue Holdings Limited 5.8%, in Flight Centre Limited of 5.1% and in Seven Network Limited of 4.8%.

Other Movers

BHP Billiton plc added 0.2% to A$43.41 after the mining company said second quarter iron ore production rose 11%.

National Australia Bank Limited closed unchanged at A$27.45 after Australia''s competition regulatory agency initiated an informal review of bank’s proposed A$13.3 billion acquisition of AXA Asia Pacific Holdings Ltd.

Orocobre Limited surged 32.1% to A$1.85 after the mineral-explorer reached agreement to establish a joint venture with Toyota Group Company, Toyota Tsusho Corporation, to develop its flagship Salar de Olaroz Lithium-Potash Project in Argentina.