Australian Profits, Current Account Deficit Rise

Darlington Musarurwa
01 Mar, 2010
New York City

Australian benchmark index gained on higher resource stocks and commodities prices. Company profits increased 2.2% in the last quarter. Rio Tinto raised its stake by 2.7% in Canada based Ivanhoe Mines. Australian current account deficit rises 19% to A$17.5 billion in December.

[R]3:00 AM New York, 7:00 PM – Australian benchmark index gained on higher resource stocks and commodities prices. Company profits increased 2.2% in the last quarter. Rio Tinto raised its stake by 2.7% in Canada based Ivanhoe Mines. Australian current account deficit rises 19% to A$17.5 billion in December.[/R]

Australian stocks gained on strong corporate profits and rising sales in the December quarter, higher commodities prices and ahead of interest rate decision tomorrow.

Gold jumped 0.9% to $1,111.80 per ounce and crude oil prices advanced 0.3% to $80.29.

In Sydney trading ASX 200 Index gained 1.1% or 48.8 to 4,686.50.

Of the ASX 200 index stocks, 160 rose, 31 fell, and 9 were unchanged. Lynas Corp. led gainers in the index shares with a rise of 8.4% followed by Australia Agriculture soaring 7%.

The Australian dollar gained 0.3% to 89.75 U.S. cents.

Current Account Deficit Rises 19%

Australian Bureau of Statistics reported today that the country’s current account deficit soared 19% to A$17.5 billion in the December quarter from the previous three months.

The deficit on the balance on goods and services increased A$1.8 billion to A$6.1 billion, while the primary income deficit increased 9% to A$11.2 billion.

Deficit on goods and services in seasonally adjusted chain volume terms soared A$3.7 billion in the September quarter to A$7.7 billion in the three months to December.

The ABS noted in that the deficit is likely to, “detract 1.3 percentage points from growth in the December quarter 2009 volume measure of GDP.”

In addition, the country’s net international investment position advanced A$12.4 billion to a net liability position of A$768 billion in the December quarter.

Australia''s net foreign debt liability increased $14.2 billion to A$647.9 billion.

Australia Company Profits Soar 2.2% in Dec

Separately, the ABS reported that sales of goods and services in the manufacturing sector climbed 3.5% in the December quarter from the previous three months.

Wholesale goods sales jumped 4.1% in the three months to December.

Inventories also increased 0.2% in the review period.

Company gross operating profit increased 2.2% in the December quarter from the September quarter, while wages and salaries edged up 0.6% in the period.

Rio Tinto Increases Stake in Ivanhoe Mines by 2.7%

Rio Tinto has shored its stake in Ivanhoe Mines, which owns the Oyu Tolgoi copper-gold project, by 2.7% to 22.4% for $259 million.

The miner intends to increase its stake to 44%.

The Mongolia project is expected to start in 2013 and produce 450,000 tons of copper and 330,000 ounces of gold a year.

ASX Movers

Carnarvon Petroleum Limited led the decliners in the S&P ASX 200 index with a loss of 6.8% followed by losses in Charter Hall Group of 3.5%, in Telecom Corporation of New Zealand Limited of 2.8%, in AXA Asia Pacific Holdings Limited 2.3% and in Caltex Australia Limited 2.1%.

Lynas Corporation Limited led gainers in the S&P ASX 200 index with a rise of 8.4% followed by gains in Australian Agricultural Company Limited 6.9%, in Toll Holdings Limited of 6.6% and in Mirabela Nickel Ltd of %.

Other Movers

OZ Minerals Limited the producer of copper and gold added 5.2% to A$1.10.

Rio Tinto Limited rose 1.2% to A$71.40 and Japanese steel industry reiterated its concerns that the proposed joint venture between the company and BHP Billiton to control production in Western Australia may lead to higher prices.

Toll Holdings Limited advanced 6.6% to A$7.25.