Metals Weakness Drag Australian Stocks

Mayank Mehta
29 Jan, 2010
New York City

Stocks in Australia closed lower after a weakness in metals prices. Investors also worried that weak job market in the U.S. will forestall global economic recovery. More home owners struggle to pay mortgages as Australian home prices surge. New Zealand budget deficit increases.

[R]7:00 PM Sydney, Australia – Stocks in Australia closed lower after a weakness in metals prices. Investors also worried that weak job market in the U.S. will forestall global economic recovery. More home owners struggle to pay mortgages as Australian home prices surge. New Zealand budget deficit increases on lower than expected tax receipts.[/R]

Australian stocks declined on the worries that U.S. jobless claims are still too high. Weekly jobless claims decreased but not much ad unemployment is still near 10%.

Weakness in metals markets also dragged trading sentiment after the metals index in London declined the most in five months.

ASX 200 index in Australia decreased 103.70 or 2.22% to 4,569.60 and of the stocks in S&P ASX 200 index, 20 increased, 167 declined and 13 were unchanged.

An index of leading economic indicators in November declined 0.3% to 111.2 as erported by the Conference Board based in New York.

The latest survey from Mortgage Finance Association of Australia said that nearly 16% homeowners are struggling to repay home loans in November up from 11.7% in May.

Australian home prices increase 4.8% in the fourth quarter ending in December and median home prices increased to A$525,524.

According to the survey, 73% of home owners expect home prices to increase in the current compared to 23% respondents in May.

New Zealand cash budget deficit for five months ended in November increase to NZ$5.28 billion according to the Treasury Department release. Tax receipts were NZ$485 million and corporate tax revenues declined to NZ$242 million.

Gross sovereign debt at the end of the period was NZ$48.08 billion or 26% of gross domestic product and is expected to increase to 36% by the first half of 2014.

ASX Movers

Platinum Australia Limited led the decliners in the S&P ASX 200 index with a loss of 9.7% followed by losses in PanAust Limited of 9.6%, in Macarthur Coal Limited of 7.8%, in CuDeco Limited 7.6% and in Perpetual Limited 6.9%.

Prime Infrastructure Holdings Ltd led gainers in the S&P ASX 200 index with a rise of 4.7% followed by gains in Southern Cross Media Group 2.4%, in Energy World Corporation Limited of 1.6% and in Crown Limited of 1.3%.

Other Movers

Miners declined sharply after metals index declined in international trading. Prices of copper, gold and aluminum edged lower.

BHP Billiton plc decreased 3.1% to A$39.40 and the mining company said Friday that A$1.93 billion of capital expenditure has been approved to underpin the accelerated growth of its Western Australia iron ore business. BHP Billiton''s share will be A$1.73 billion.

Foster’s Group Limited rose 0.3% to A$5.34 after the beer and wine maker appointed a 20-year veteran of Diageo Plc to manage its Carlton and United breweries division.

Platinum Australia Limited plunged 9.7% to A$1.01.

Rio Tinto Limited the mining company declined 4.8% to A$68.00.