Sydney, Oct 16, 2008 (ABN Newswire) - Overnight the Wall St took a dive on grim economic news pointing to weaker growth and profits in the year ahead, with Dow Jones Industrial Average fell 7.87% for its biggest percentage loss since October of 1987. The US Federal Reserve's snapshot of business conditions said economic activity was weaker across all 12 districts in September and consumer spending fell in most regions.
Yesterday, the Australian share market closed back in the red, as concerns about the outlook for commodities dragged on miners. The benchmark S&P/ASX200 index was down 35.2 points, or 0.81%, on Wednesday at 4300, while the broader All Ordinaries index fell 39 points, or 0.9%, to 4272.5.
At 6.59am, the December Share Price Index futures contract on the Sydney Futures Exchange was down 301 points at 4084.
The Australian dollar opened weaker, down nearly 5%, as investors shunned riskier assets such as equities and high-yielding currencies on continuing fears of a recession in the United States. At 7am, the Australian dollar was trading at $US0.6656/58, down from yesterday's close of $US0.7005/09.
Oil prices sharply dropped today on recession fears. New York's main contract, light sweet crude for November, slid $US4.09 to close at $US74.54.
Key Economic Facts and Figures
Signs the Australian economy's current weakness may extend into the middle of next year come from the release of the Westpac-Melbourne Institute Leading Index. The index reading for August was 2.5%, which indicates economic growth remains weak and below long term trends. Westpac says it does not believe the Australian economy will slip into recession.
The Department of Education, Employment and Workplace Relations (DEEWR) says the October reading of its monthly leading indicator of employment was minus 0.060, compared with minus 0.018 in September. The federal government's leading indicator of employment growth has fallen for a ninth consecutive month.
Today's data includes the Reserve Bank of Australia's October Bulletin, which includes statistics on credit card use.
M&A News
FKP Property(ASX:FKP) placed a 5% stake in Stockland(ASX:SGP) at A$2 per stapled security for A$28 million, a premium of 33% of its closing price on October 10. FKP Property Group says the placement will help strengthen its capital position.
AGL Energy(ASX:AGK), Australia's largest gas and electricity retailer, says it would be keen on several acquisitions after wrapping up the sale of its stake in oil and gas projects in Papua New Guinea. AGL yesterday confirmed its forecast for net profit after tax of between A$360 million and A$390 million in the 2009 financial year.
Important Corporate News
ANZ Bank(ASX:ANZ) has lowered its fixed rate home loans for the second time in less than a week. The bank yesterday dropped its fixed mortgages by a further 0.14 to 0.7 percentage points for loans of up to four years, effective from Monday, October 20.
Rio Tinto(ASX:RIO) has warned of slowing Chinese demand for commodities because of the world financial crisis and signalled a possible delay in plans to sell $US10 billion in assets. Rio Tinto chief executive Tom Albanese said yesterday a post-Olympics slowdown in commodities demand would drag on longer than the company had thought. Australia's resources boom is not expected to bounce back this year.
Iluka Resources(ASX:ILU) has defied the increasingly gloomy outlook for China's economic growth prospects, declaring yesterday it had noticed no drop-off in demand for its key product, zircon, while the sudden slump in the value of the Australian dollar would help the Perth miner achieve a 150 per cent jump in full-year profit.
Origin Energy(ASX:ORG) has strengthened its full-year profit guidance and, like many cashed-up companies recently, it expects the current market turmoil to throw up acquisition opportunities. The company expects a lift of up to 40 per cent in annual profit this financial year above last year's A$443 million, boosted by its joint venture with ConocoPhillips(NYSE:COP). Origin also said it was interested in buying up the retail energy assets owned by the New South Wales government.
Yesterday, the Australian share market closed back in the red, as concerns about the outlook for commodities dragged on miners. The benchmark S&P/ASX200 index was down 35.2 points, or 0.81%, on Wednesday at 4300, while the broader All Ordinaries index fell 39 points, or 0.9%, to 4272.5.
At 6.59am, the December Share Price Index futures contract on the Sydney Futures Exchange was down 301 points at 4084.
The Australian dollar opened weaker, down nearly 5%, as investors shunned riskier assets such as equities and high-yielding currencies on continuing fears of a recession in the United States. At 7am, the Australian dollar was trading at $US0.6656/58, down from yesterday's close of $US0.7005/09.
Oil prices sharply dropped today on recession fears. New York's main contract, light sweet crude for November, slid $US4.09 to close at $US74.54.
Key Economic Facts and Figures
Signs the Australian economy's current weakness may extend into the middle of next year come from the release of the Westpac-Melbourne Institute Leading Index. The index reading for August was 2.5%, which indicates economic growth remains weak and below long term trends. Westpac says it does not believe the Australian economy will slip into recession.
The Department of Education, Employment and Workplace Relations (DEEWR) says the October reading of its monthly leading indicator of employment was minus 0.060, compared with minus 0.018 in September. The federal government's leading indicator of employment growth has fallen for a ninth consecutive month.
Today's data includes the Reserve Bank of Australia's October Bulletin, which includes statistics on credit card use.
M&A News
FKP Property(ASX:FKP) placed a 5% stake in Stockland(ASX:SGP) at A$2 per stapled security for A$28 million, a premium of 33% of its closing price on October 10. FKP Property Group says the placement will help strengthen its capital position.
AGL Energy(ASX:AGK), Australia's largest gas and electricity retailer, says it would be keen on several acquisitions after wrapping up the sale of its stake in oil and gas projects in Papua New Guinea. AGL yesterday confirmed its forecast for net profit after tax of between A$360 million and A$390 million in the 2009 financial year.
Important Corporate News
ANZ Bank(ASX:ANZ) has lowered its fixed rate home loans for the second time in less than a week. The bank yesterday dropped its fixed mortgages by a further 0.14 to 0.7 percentage points for loans of up to four years, effective from Monday, October 20.
Rio Tinto(ASX:RIO) has warned of slowing Chinese demand for commodities because of the world financial crisis and signalled a possible delay in plans to sell $US10 billion in assets. Rio Tinto chief executive Tom Albanese said yesterday a post-Olympics slowdown in commodities demand would drag on longer than the company had thought. Australia's resources boom is not expected to bounce back this year.
Iluka Resources(ASX:ILU) has defied the increasingly gloomy outlook for China's economic growth prospects, declaring yesterday it had noticed no drop-off in demand for its key product, zircon, while the sudden slump in the value of the Australian dollar would help the Perth miner achieve a 150 per cent jump in full-year profit.
Origin Energy(ASX:ORG) has strengthened its full-year profit guidance and, like many cashed-up companies recently, it expects the current market turmoil to throw up acquisition opportunities. The company expects a lift of up to 40 per cent in annual profit this financial year above last year's A$443 million, boosted by its joint venture with ConocoPhillips(NYSE:COP). Origin also said it was interested in buying up the retail energy assets owned by the New South Wales government.
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