Australia Market Report of August 19: Commodities Boom is Ending

Sydney, Aug 19, 2008 AEST (ABN Newswire) - Yesterday the Australian share market nudged a little higher as gold and oil prices rose and investors anticipated a good profit result from BHP Billiton, which released its result after the market closed.

Analysts said the big miners recovered early losses as oil and gold strengthened during the day. In recent weeks, some economists have expressed concerns that slowing growth in China could lead to less demand for commodities. Fears are growing that the commodities boom is ending as the flight of investors from the oil market extends to gold, copper and other metals markets. As a result, the price of metals such as zinc and copper have fallen and the Australian dollar has plunged against the US dollar.

The benchmark S&P/ASX200 index was up 3.3 points to 4985, while the broader All Ordinaries index gained 4.6 points to 5043.5.

At 0743 AEST, the Sydney Futures Exchange's September share price index futures contract was down 85 points at 4,920.

Key Economic Facts and Figures

Federal Treasurer Wayne Swan says the retail banks will be putting the economy at risk if they don't match any interest rate cut by the Reserve Bank. The Reserve Bank of Australia will release the minutes of its August 5 board meeting. RBA has already clearly indicated it intends to cut the official rate because of a rapid slowdown in economic growth.

Australian Chamber of Commerce and Industry (ACCI) small business survey will be released, the Housing Industry Association of Australia issues its state and national outlook for the June quarter. The Australian Bureau of Statistics releases data on merchandise imports for July, and the Melbourne Institute issues its quarterly wages report.

IPO and M&A News

The jobs site Seek (ASX:SEK) is looking to step up its international expansion amid a slowdown in growth at home, saying it may buy two offshore recruitment companies in the next two months. But no further details are provided. The company was "looking pretty closely" at two specific takeover opportunities outside Australia, a month after boosting its investment in the Chinese jobs site Zhaopin by $US45 million (A$51.5 million), one of its two chief executives, Paul Bassat, said yesterday.

Straits Resources (ASX:SRL) is selling its coal interests in Madagascar for US $100.3 million (A$115.9 million) to its partial subsidiary, coalminer Straits Asia Resources. Shareholders will be asked next month to approve a restructure that will see Straits' 51 per cent-owned Indonesian coal mine business listed on the Australian Securities Exchange. If the deal goes ahead, Straits Asia will be listed by October, leaving Straits as a cashed up copper producer.

Important Corporate News

Sino Gold Mining Ltd (ASX:SGX)( HKG:1862) has reported a modest half year net loss, but says the narrowing of the loss from the previous corresponding period reflects strong initial operating earnings from its flagship Jinfeng mine and BioGold processing plant in China. Net loss of A$1.6 million for the six months ended June 30 compares with a net loss of A$3.1 million for the previous corresponding half.

BHP Billiton (ASX:BHP) has reported a record annual profit for the year ended June 30 climbed 14.7% to $US15.39 billion ($A17.6 billion), from $US13.416 billion in the previous year. BHP Billiton said demand for its commodities is expected to "remain strong" over the longer term, even though it sees global economic growth slowing in the short term. The results were released after the stock market had closed. BHP Billition shares closed up 62 cents at A$38.60.

Australian gold producer Newcrest Mining (ASX:NCM) reported an 87% rise in 2008/09 net profit after it closed out its gold hedge book to give itself more exposure to rising bullion prices. Newcrest said its statutory profit for the year to June 30 was A$134.2 million from A$72 million in the previous year.

OneSteel(ASX:OST), Australia's second-largest steel company, reported 18.3% growth in full-year profit, boosted by strong demand and higher prices. Net profit rose to A$244.9 million from A$207 million a year earlier.