Australian Market Report
Australian Market Report

Sydney, Nov 26, 2008 AEST (ABN Newswire) - US stocks closed mixed overnight as a new initiative by the Federal Reserve to reopen credit markets and lower borrowing costs helped offset more glum economic news.

Yesterday, benefited from the US government's bailout plan on Citigroup, the Australian market benchmark S&P/ASX200 share index had its best day in more than 11 years, jumping 5.8%, or 198.3 points, to 3623.4, while the broader All Ordinaries index was up 5.5%, or 186.6 points, to 3575.4. Analysts say the market sentiment remains fragile as fundamental problems have not changed, although world governments are taking action to stimulate economy.

The December Share Price Index futures contract on the Sydney Futures Exchange was up 81 points, or more than 2%, at 3,700.

Oil prices slid on Tuesday as traders banked profits following sharp gains won a day earlier, analysts said. Light sweet crude for delivery in January dropped $US3.73 to settle at $US50.77 a barrel on the New York Mercantile Exchange.

The Australian dollar has opened only marginally higher after failing to hold above $US0.6600 during offshore trading. At 0700 AEDT, the Australian dollar was trading at $US0.6454/60, up from Tuesday's close of $US0.6449/53.

Key Economic Facts and Figures

The Access Economic report suggests the Federal Budget will be forced into deficit to meet the welfare costs of rising unemployment. It said the unemployment forecast of 5.4 per cent, or additional 140,000 people, will significantly increase the Government's welfare outlays.
Today the Australian Bureau of Statistics releases data on construction work done in the September quarter.

The Federal Department of Education, Employment and Workplace Relations will release its skilled vacancies survey for November.

M&A News

BHP(ASX:BHP) last night withdrew its hostile bid for Rio Tinto(ASX:RIO) on grounds that the deepening global economic crisis and slowing raw materials demand had made the deal too risky for its shareholders. Rio Tinto shares have taken a massive hit overnight following BHP Billiton's shock move to pull its takeover bid.

Babcock & Brown Power(ASX:BBP) has sold its interest in two Western Australian power stations for a total of A$130 million. The interests were sold to entities related to ERM Power, which holds stakes in both power stations. BBP said it will use the funds to repay a A$118 million debt facility.

Gunns Limited(ASX:GNS) has announced it has reached agreement to sell A$175.2 million worth of softwood to the US firm GMO Renewable Resources.

QBE Insurance (ASX:QBE) has entered into an agreement to purchase ZCS, a US-based underwriting agency for an up-front payment of $US575 million. QBE has also reached agreement to acquire two other underwriting agencies in the United States and one in Europe and a renewal rights portfolio in the US. The five acquisitions are expected to produce gross written premium of close to $US525m and profit around $US175m.

Important Corporate News

Ailing lead and zinc miner Perilya Ltd(ASX:PEM) has asked the Takeovers Panel to intervene in CBH Resources Ltd's(ASX:CBH) A$28.9 million bid and confirmed it is being eyed by rival suitors.

Oz Minerals(ASX:OZL) has outlined plans to cut A$680 million of spending next year by deferring expansion plans and slashing operating costs at its mines as it attempts to refinance $US420 million of debt by the end of the year.

Diversified industrial manufacturer Nylex(ASX:NLX) said it needed a further financial restructuring to withstand the heavy impact of the credit crisis. The company also revealed that it had closed several of its distribution warehouses and flagged staff cuts.

Premier Investments(ASX:PMV) warned that earnings in the company's retail business this financial year will be down 10 per cent and said that, so far this year, same-store sales had fallen 6per cent.

Electrical contractor Norfolk Group(ASX:NFK) has reported a 45 per cent drop in profit for the first half of fiscal 2009, and has revised its earnings guidance downwards for the full year. Norfolk reported net profit for the half year to September 30 of $4.287 million, down from $7.777 million in the prior corresponding half.

David Jones Ltd(ASX:DJS) has reaffirmed its profit for fiscal 2009 after reporting a 6.3 per cent fall in first quarter sales. Total sales for the three months ended October 25 fell to A$442.3 million, from A$471.9 million in previous corresponding period.

1. Related Stocks - Mid Market (AEST 1230)
Code   % Change   Volume     Turnover      Low  High
ASX:BHP +6.78   21,511,754 $613,035,174  2791    2856
ASX:RIO -32.37  9,518,513  $405,442,143  4080    4544
ASX:QBE +11.56  21,000     $577,500              
ASX:GNS +9.7    1,507,495  $1,102,519    70      75
ASX:PMV -4.73   109,139    $351,441      321     326
ASX:BBP +10.34  7,522,843  $249,050      3       3.8
ASX:NFK -20.51  373,515    $128,184      31      41
ASX:PEM -1.08   1,275,900  $117,645      9       9.6
ASX:NLX +4.76   36,000     $4,205        10.5    12
ASX:CBH +2.85   408,879    $14,464       3.5     3.7
2. Top 10 ASX on Turnover - Mid Market (AEST 1230)
Code   % Change   Volume     Turnover      Low  High
ASX:BHP +6.78   21,536,965 $613,741,107  2791    2856
ASX:RIO -32.39  9,520,023  $405,507,391  4080    4544
ASX:WBC -4.2    4,824,584  $84,213,361   1697    1783
ASX:TLS +1.45   19,922,564 $83,302,705   414     427
ASX:CBA -4.26   2,093,301  $69,236,334   3225    3330
ASX:NAB -1.4    3,409,667  $68,243,686   1933    1990
ASX:ANZ -3.02   3,957,957  $56,325,212   1400    1432
ASX:MQG -1.55   1,155,248  $55,866,251   2859    2970
ASX:WPL -1.49   1,194,926  $41,368,878   3160    3360
ASX:WOW -.08    1,611,134  $40,840,302   2465    2547


Michelle Liang
Asia Business News Asia Bureau
Tel: +61-2-9247-4344

Related Companies

Rio Tinto Limited cs ct ja en kr ae de es id 
QBE Insurance Group Limited cs ct ja en kr ae de 
Premier Investments Limited cs ct ja en kr ae de 
Perilya Limited cs ct ja en kr ae de es id 
Oz Minerals Limited cs ct ja en kr ae de es id 
Nylex Limited cs ct ja en kr ae de 
Norfolk Group Limited cs ct ja en kr ae de 
Gunns Limited cs ct ja en kr ae de 
David Jones Limited cs ct ja en kr ae de 
CBH Resources Limited cs ct ja en kr ae de 
BHP Billiton Limited cs ct ja en kr ae de es id 
Alinta Energy Group cs ct ja en kr ae de 

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