Australian Dollar Gains; CBH Surges on Toho Deal

Mayank Mehta
21 Jan, 2010
New York City

Stocks and commodities in Sydney trading declined after China reported a surge in economic expansion. The Australian dollar strengthened. New Zealand retail sales increased 0.8%. CBH Resources surged 15% after it struck a deal with Toho Zinc Co.

[R]10:00 PM Sydney, Australia – Stocks and commodities in Sydney trading declined after China reported a surge in economic expansion. The Australian dollar strengthened. New Zealand retail sales increased 0.8%. CBH Resources surged 15% after it struck a deal with Toho Zinc Co.[/R]

Stocks in Australia declined after weak commodities prices. Chinese economic expansion of 10.7% in the fourth quarter prompted worries that tighter monetary conditions may trim imports from Australia.

The ASX 200 index in Australia decreased 41.00 or 0.84% to 4,827.20 and of the stocks in S&P ASX 200 index, 37 increased, 151 declined and 12 were unchanged.

The Australian dollar increased to 91.37 U.S. cents and to 83.68 yen after the release of Chinese economic data. The currency markets viewed the data differently than in the commodities markets and estimated that a longer sustained economic expansion in China is beneficial to Australian exports.

Separately, New Zealand retail sales increased 0.8% in November from October according to the data released by the statistics agency.

ASX Movers

Aquila Resources Limited led the decliners in the S&P ASX 200 index with a loss of 7.8% followed by losses in Aquarius Platinum Limited of 6.7%, in Australian Worldwide Exploration Limited of 6.7%, in Mount Gibson Iron Limited 6.2% and in Gindalbie Metals Ltd 5.6%.

Macquarie CountryWide Trust led gainers in the S&P ASX 200 index with a rise of 3.5% followed by gains in Virgin Blue Holdings Limited 3.1%, in Prime Infrastructure Holdings Ltd of 2.7% and in AMP Limited of 2.4%.

Other Movers

BHP Billiton plc decreased 1.7% to A$42.67 after the mining company boosted its petroleum exploration capital spending by 33% on an increase in drilling in the US Gulf of Mexico and offshore Australia.

CBH Resources Limited surged 14.8% to A$0.15 and the zinc producer signed a contract with its shareholder Toho Zinc Co., Ltd to sell a 50% interest in the Rasp Project at Broken Hill to Toho for A$57.5 million. CBH also plans to raise A$10 million by placing 50 million CBH shares to Toho at A$0.20 per CBH share.

GrainCorp Limited fell 2.7% to A$5.97 after the grain handler announced that chief executive Mark Irwin has resigned and chief financial officer Ian Wilton has been appointed as interim chief. The company gave no reason for the resignation.

The company returned to profit after two years of losses and is expected to operating earnings between A$180 million and A$210 million in the year to Sept 30. Grain depots are expected to handle between 7 million and 8.5 million tons of grains in the fiscal year.

Lihir Gold Limited slipped 4.2% to A$3.13 on the worries that metals prices may fall if China tightens its monetary policies to stem real estate prices. The gold miner Newcrest Mining Limited fell 3.6% to A$34.11

Qantas Airways Limited rose 2.0% to A$2.97 and the airline yesterday increased A380 service to daily on the Los Angeles-Sydney route.

The carrier and Virgin Blue Holdings increased on the speculation that recent troubles with JAL Corp may help the Australian carriers to gain market share.

Rio Tinto Limited declined 3.1% to A$75.55 after the mining company said demand for iron ore, copper and gold was strong in the fourth quarter but took a cautious view as governments around the world look to unwind economic stimulus.

Santos Limited fell 1.1% to A$13.48 after the oil and gas explorer reported a sharp drop in revenues on lower oil prices and stable production volumes in 2009.

Woodside Petroleum Ltd the oil and gas producer dropped 1.2% to A$45.90.