Sydney, Sep 18, 2008 AEST (ABN Newswire) - The Australian share market closed lower yesterday despite a positive lead from US markets and the United States central bank's rescue of global insurer American International Group (AIG). Overnight Wall Street plunged more than 4% after the US Federal Reserve has announced it would provide AIG with an $US85 billion rescue loan to save it from bankruptcy.
Analysts said investors would also worry about which company would be next to find itself in trouble. Global markets have been in turmoil this week, following US investment bank Lehman Brothers filing for bankruptcy, the fire sale of rival Merrill Lynch and concerns over the financial viability of AIG.
The benchmark S&P/ASX200 index fell 28.6 points, or 0.6%, to 4722.2, while the broader All Ordinaries index was down 30.1 points, or 0.63%, to 4769.7.
At 6.59am, the Sydney Futures Exchange's September Share Price Index contract was 153 points lower at 4578.
The Australian dollar opened a US cent weaker today, after hitting a fresh 13-month low. At 0700 AEST, the Australian dollar was trading at $US0.7904/11, down from yesterday's close of $US0.8011/15.
Oil prices shot up $US6 a barrel, rebounding as fears of a spreading crisis in the US financial sector sent investors scrambling out of stocks and into hard assets. Light, sweet crude for October delivery rose $US6.01, or 6.59 per cent, to settle at $US97.16 a barrel on the New York Mercantile Exchange on Wednesday.
Key Economic Facts and Figures
Central banks worldwide have pumped billions in cash into the financial system this week, in a bid to keep banks confident in the financial system. The RBA also injected A$4.285 billion into the banking system to create more credit, and ensure banks stay confident lending to one another, which forms the backbone of the financial system. RBA governor Glenn Stevens has declared Australia are better prepared than most, as the US yesterday bailed out the world's biggest insurer, American International Group.
Property markets in Australia's major cities are yet to bottom, with Sydney residential property the most likely to recovery first, according to the latest Australian Property Directions Survey. It is found that most metropolitan property sectors would bottom in 2010.
Australia's international merchandise imports totalled A$18.455 billion in August, from a revised A$19.603 billion in July, the Australian Bureau of Statistics said on Wednesday. The ABS said preliminary analysis showed that goods imports on a balance of payments basis fell by 3% in seasonally adjusted terms between July and August. The biggest fall came in fuels which fell 25% in the month.
SEEK (ASX:SEK) will acquire a 30 per cent interest in Brasil Online, owner of employment websites Catho Online and Manager Online. SEEK will invest $US67.5 million for its stake and take a seat on the board. Seek also has snapped up a minority stake in a Malaysian-listed employment site provider, spending A$19.3 million for a 10 per cent interest in JobStreet Corporation Berhad(KUL:JOBS), which provides jobs websites throughout South East Asia.
Chinese oil and metals group CITIC Resources(HKG:1205) is open to selling its stake in Australia's Macarthur Coal(ASX:MCC) when the market situation improves, CITIC said on Wednesday. CITIC raised its stake in Macarthur to 20.39 percent in July, making it the top shareholder. Any move to sell could revive the chance of another big shareholder, such as Arcelor Mittal(NYSE:MT) or Posco(SEO:005490), mounting a takeover.
Babcock & Brown(ASX:BNB) is though to be in talks for the sale of its 37 percent stake in oil and gas group Coogee Resources(ASX:CGR). The value of the holding has increased in line with the stronger oil process, but Goldman Sachs JBWere yesterday lowered its short-term oil forecasts.
Important Corporate News
Junior gas producer Molopo Australia Ltd(ASX:MPO) has reported a modest annual loss, reflecting the company's increased activities, and continues to seek projects that will quickly provide cash flow. Molopo reported a loss after tax for the 2007/08 financial year of A$8.9 million, a widening from the A$4.6 million net loss for the prior corresponding period.
Queensland Gas Company(ASX:QGC) has revised upwards the gas reserves required for a proposed $8 billion liquefied natural gas development. The company was positioning itself for its domestic strategy, revolving around gas-fired power stations, and its international strategy with Britain's BG Group and the Queensland Curtis LNG project.
Asia Business News Asia Bureau
Queensland Gas Company Limited
Molopo Energy Limited
Macarthur Coal Limited
JobStreet Corporation Berhad
Citic Resources Holdings Limited
Babcock & Brown Limited