Sydney: David Jones Up; Macquarie Down

Darlington Musarurwa
09 Feb, 2010
New York City

Australian stocks looked for a direction in the global markets. David Jones, the retailer lifted its first half profit outlook. Macquarie Group estimated second half earnings growth of 10%, lower than expected. Newcastle weekly coal exports grow 11.3%.

[R]3:00 AM New York, 7:00 PM Sydney – Australian stocks looked for a direction in the global markets. David Jones, the retailer lifted its first half profit outlook. Macquarie Group estimated second half earnings growth of 10%, lower than expected. Newcastle weekly coal exports grow 11.3%.[/R]

The benchmark index in Australia dipped 0.4% led by financial stocks after Macquarie Group’s second half profit forecasts were lower than expected.

The lender also noted that the mulled regulatory changes have made global conditions uncertain for financial institutions.

In Sydney trading ASX 200 Index dropped 0.4% or 16.3 to 4, 505.10.

Of the ASX 200 index, 81 rose, 109 fell, and 10 were unchanged. Macquarie Group led decliners in the index shares with a fall of 6.1% after the company projected that second half profit will climb 10%, lower than market projections.

The Australian dollar rose 0.6% to 86.96 U.S. cents.

In a research paper co-written by the Reserve Bank of Australia Governor Glenn Stevens noted if interest rates are left low for too long, the monetary policy to burst the asset bubbles may not be effective.

He further noted at a gathering of central bankers in Sydney that any attempt to temper these credit bubbles by the central bankers will only make the subsequent economic decline worse.

At a gathering attended by the European Central Bank President Jean Claude Trichet, People’s Bank of China Governor Zhou Xiaochuan and the U.S. Federal Reserve Governor Janet Yellen, central bankers to discuss the lessons learned from the latest financial crisis.

David Jones Lifts Profit Guidance

David Jones reported today that like-for-like sales in the second quarter ended January 23, 2010 gained 3.1% to A$634 million from the same period a year earlier.

First half sales also advanced 2.2% to A$452 million from last year.

The company increased its profit after tax guidance in the first half to 10% from 0% to 5% on higher sale expectations from the redeveloped Bourke Street store.

Macquarie Projects 10% Profit in H2

Macquarie Group announced today that its profits in the second half to March 31 may increase 10% from A$480 million in the first half, bringing the full year profit to A$1.01 billion, lower than analysts’ estimate of A$1.04 billion

Group chief executive officer Nicholas Moore noted that the lender is still maintaining “a conservative approach” to funding and capital.

Moore noted that the proposed regulatory changes have made global conditions increasingly uncertain.

“We are saying watch this space in terms of what is happening in Australia and globally with Basel. We don''t know what we are going to end up with but it''s a sure bet that there will be the requirement to have more regulatory capital,” said Moore.

Newcastle Weekly Coal Exports Grow 11.3%

Newcastle Port Corp. reported that coal shipments at Australia’s Newcastle port jumped 11.3% to 2.04 million metric tons from 1.83 million metric tons a week earlier.

Ships waiting to load 4.36 million tons of coal remained unchanged at 55, while coal ships queued to load for an average of 18.95 days, from 15.79 days a week earlier.

ASX Movers

Macquarie Group Limited led the decliners in the S&P ASX 200 index with a loss of 6.1% followed by losses in Tabcorp Holdings Limited of 5.7%, in Roc Oil Company Limited of 5.0%, in Sundance Resources Limited 4.0% and in Southern Cross Media Group 3.6%.

Bradken Limited led gainers in the S&P ASX 200 index with a rise of 11.6% followed by gains in Panoramic Resources Limited 9.3%, in Gunns Limited of 6.1% and in Emeco Holdings Limited of 5.5%.

Other Movers

Bradken Limited surged 11.6% to A$6.53 after the supplier of tools and services to mining companies posted first-half net profit declined 26.4% to A$25.72 million.

Cochlear Limited added 3.5% to A$63.55 after the maker of hearing implant said first-half net profit increased 8% to A$75.2 million compared to net profit of A$69.9 million a year ago.

David Jones Limited advanced 2.8% to A$4.74 after the department store chain raised sales and earnings forecasts.

Macquarie Group Limited dropped 6.1% to A$47.28 after it estimated lower than expected second half net gain of 10%.

Virgin Blue Holdings Limited rose 0.8% to A$0.57 after the airline was upgraded to “buy” from “hold” at Deutsche Bank AG.