Australian stocks down amid profit-taking
The Australian share market closed weaker on Tuesday, dragged down by financial stocks and profit taking after recent gains. The benchmark S&P/ASX200 index finished down 22.2 points, or 0.47 per cent, at 4,687.8 points, while the broader All Ordinaries index was 19.1 points lower, or 0.40 per cent, at 4,761.5 points. On the ASX24 the December share price index contract was 23 points lower at 4,696 points, with 21,571 contracts traded.
The proposed $8.4 billion merger between the Australian and Singapore stock exchanges requires the green light from Australia's Foreign Investment Review Board, the Reserve Bank of Australia and the Australian Securities and Investments Commission. Shares in ASX closed down $3.08, or 7.38 per cent, at $38.67. ANZ and NAB are due to release annual profit results this week, and Westpac releases its results next week. Commonwealth Bank held its annual general meeting on Tuesday morning.
The big four banks finished weaker. Commonwealth Bank was the worst performer on the S&P/ASX 20, ending down 77 cents, or 1.51 per cent, at $50.18, after chief executive Ralph Norris said funding costs woll remain high, possibly paving the way for interest rate rises outside of the central bank's own. National Australia Bank finished 26 cents lower, or 1.04 per cent, at $24.75. Westpac closed down 11 cents at $22.84 after announcing that its takeover of St George Bank had led to a contribution to annual statutory net profit of $685 million. ANZ finished five cents lower at $23.85.
The major miners closed mixed. BHP Billiton was up nine cents at $41.83 while Rio Tinto was down four cents at $84.06. Fortescue Metals was four cents higher at $6.59. In market news on Tuesday, lead and zinc miner Perilya has formally launched its $C184 million bid for Canada's GlobeStar Mining Corporation. Perilya ended up 0.5 cents at 56.5 cents. Energy and resource contractor WorleyParsons says it expects an improvement in earnings this financial year after a disappointing result in 2009/10. WorleyParsons ended down 83 cents, or 3.58 per cent, at $22.36.
Wealth manager Perpetual says it will consider de-merging its trustee business from its funds management operations in light of Kohlberg Kravis Roberts' (KKR) $1.75 billion bid for the company. Perpetual closed steady at $37.90. Listed health insurer NIB Holdings (nib) says it will continue to pursue merger and acquisition opportunities and is contemplating a return of capital to shareholders. nib closed steady at $1.255. Oil Search says a dip in September quarter oil and gas production was offset by a marginally higher realised oil price. Shares in Oil Search ended down three cents at $6.49.
Global beverage firm Foster's Group Ltd hopes to make a final decision on whether to demerge its wine and beer businesses by March or April 2011. Foster's finished up three cents at $6.16. Bendigo and Adelaide Bank will be the sole owner of Rural Bank after agreeing to buy out co-owner Elders remaining 40 per cent stake for $165 million. Bendigo closed down 11 cents at $9.01, while Elders was up three cents, or 4.51 per cent, at $6.95. Surf wear retailer Billabong has forecast relatively flat earnings in 2010/11 as a stronger Australian dollar continues to place pressure on its bottom line. Billabong closed up one cent at $7.82. Legal firm Slater & Gordon is set to buy NSW-based personal injury litigator Keddies Lawyers for $35 million. Slater and Gordon finished up 5.5 cents, or 3.12 per cent, at $1.82.
The spot price of gold in Sydney was $1,339.80 per fine ounce, down $3.61 from Monday's local close of $1,343.41. Gold miner Newcrest Mining closed down six cents at $40.56. The top traded stock by volume was OBJ Ltd, with 391.96 million shares worth $12.70 million changing hands. OBJ Limited closed up 1.2 cents, or 60 per cent, at 3.2 cents. OBJ announced on Monday that global druggist GlaxoSmithKline would development its FIM technology. Preliminary market turnover was 3.07 billion shares worth $5.63 billion, with 542 stocks up, 606 down and 365 unchanged.
The Australian dollar was lower Tuesday as traders kept to the sidelines ahead of crucial third quarter inflation data due Wednesday, which could hold the key to an interest rate increase next week. Government bonds were also little changed through the session with bets on the likelihood of an interest rate hike at the Reserve Bank of Australia policy meeting next Tuesday hovering around 50/50. The cash rate target was left at 4.50% in October.
The RBA has been on hold since May, but continues to speak about the challenge of managing a commodity price boom which is likely to spur stronger economic growth and inflation over coming years. On Monday, RBA Governor Glenn Stevens spoke of a term of trade shock to the economy and argued monetary policy needs to reflect the boom conditions it is bringing to parts of the economy. The Australian dollar traded at $0.9908, down from $0.9941 late Monday, and traded at Y80.05, down from Y80.505.