Australia Market Report of July 31: Confidence Returns, Oil Soars Up

Sydney, July 31, 2008 AEST (ABN Newswire) - Wall Street began positively overnight as the Federal Reserve, in cooperation with the European Central Bank and the Swiss National Bank, would extend the emergency loan period and take other measures in an effort to ease tight credit conditions. Private research group ADP issued a better than expected report which showed employers added 9,000 jobs in July which raised hopes that the government figures, due on Friday, may also be better than forecast.

Oil prices shot up Wednesday, jumping as much as $US5 a barrel and halting a dramatic two-week slide after the US government reported a surprise drop in gasoline supplies.

The Australian share market was boosted by banks yesterday after investor confidence returned following a rally overnight on Wall Street. The benchmark S&P/ASX200 index rose 89.2 points, or 1.84%, to 4936.7, while the broader All Ordinaries climbed 85.4 points, or 1.73%, to 5008.7.

Today at 6.37am on the Sydney Futures exchange, the September share price index futures contract firmed 85 points, or 1.74 per cent, to 4975.

Key Economic Facts and Figures

The Australian Bureau of Statistics reported that the number of approvals to build homes fell by 0.7 per cent to 12,237, seasonally adjusted, extending the 7.2 per cent fall in May. At that level, approvals were down by 15.5 per cent from their recent peak of 14,483 in November last year, and 9.5 per cent under the average for the past decade. The latest numbers from the ABS show the trend measure of housing finance approvals, excluding refinancing deals, 10 months into a decline by May. Federal Treasury estimates show demand for new homes is expected to rise to more than 200,000 by 2009-10, leaving a shortfall of about 50,000 homes, as only 160,000 homes are built.

Australian house prices fell in a majority of capital cities in the last few months as high interest rates brought about the weakest housing market in four years.National house and unit prices could dive by 10 per cent next year as a prolonged real estate slowdown sets in, online real estate data group Australian Property Monitors (APM) said.

The Rudd Government will today formally receive the report on future aid for the car industry from a panel headed by former Victorian premier Steve Bracks. The report is believed to recommend phasing down tariffs on imported cars from 10 per cent to 5 per cent by 1 percentage point a year between 2010 and 2014, instead of the currently scheduled cut straight to 5per cent in 2010.

Today, the Reserve Bank of Australia releases financial aggregates data for June.

IPO and M&A News

BG Group Plc (LSE:BG), the UK's third largest natural gas producer, is likely to raise its hostile A$13.7 billion takeover bid for power retailer Origin Energy Ltd (ASX:ORG), according to analysts. Analysts said BG Group is likely to raise its bid by September and put a valuation on Origin shares ranging from A$17.35 to A$20.

The Appeal Court's decision, a minute of which was made public on Thursday, prevents Australia's Woolworths (ASX:WOW) and New Zealand co-operative Foodstuffs bidding for The Warehouse (NZE:WHS), this country's largest listed retailer in a deal that could be worth over $NZ2 billion.

Mitsubishi Development Pty Ltd vice-president iron ore division Saburo Takeuchi said today that the company could increase its 50 per cent interest in Murchison's (ASX:MMX) infrastructure arm, Oakajee Port & Rail (OPR), and its Jack Hills mine in the mid-west.

Important Corporate News

National Australia Bank Ltd (ASX:NAB) has appointed the head of its New Zealand operations, Cameron Clyne, as its new chief executive to succeed John Stewart officially from January 1.

Just Group (ASX:JST) says its second half sales revenue has risen strongly and will lead to a 7% gain in annual sales. As a result, its sales for the fiscal 2008 year will total A$812.2 million.