Sydney, Aug 26, 2008 AEST (ABN Newswire) - The Australian share market closed higher yesterday on gains from the financial sector, and following a strong lead from Wall Street over the weekend.
The benchmark S&P/ASX200 rose 83.5 points, or 1.69%, to 5014.9, while the broader All Ordinaries gained 79.9 points to 5090.1.
Overnight US stocks fell and the Dow Jones Industrial Average lost more than 200 points as nervousness about the condition of mortgage-finance and housing markets kept financial companies under pressure. Oil prices edged higher on Monday as the major Baku-Tblisi-Ceyhan pipeline resumed operations after repairs from a fire and fresh unrest in Nigeria. New York's main contract, light sweet crude for October, rose 52 US cents to close at $US115.11 dollars a barrel.
At 7.04am on the Sydney Futures Exchange, the September share price index futures contract was down 90 points at 4911.
Key Economic Facts and Figures
Economic forecaster BIS Shrapnel has forecast a return to strong economic growth in the medium-term. In its Long Term Forecasts 2008 to 2023 report, BIS predicts interest rates will be lowered during fiscal 2009, believing the Reserve Bank of Australia will not allow the sharp slowdown in retail spending and building approvals witnessed in the first half of 2008 to cause further contraction in employment, spending and investment.
The Fujitsu Consulting survey predicted more than one million Australian households were expected to experience some form of mortgage stress by December.
Only one in 10 senior corporate leaders expect business conditions to improve this financial year, the Perpetual Leadership Survey says. 78 per cent of the 661 business leaders surveyed expect 2008-09 to be more difficult for business than the previous year. Underlying these concerns are fears about further rises in oil prices, commodity prices and interest rates. Additionally, the higher cost of credit in the present environment places new pressures on business. Factors that would prop up the Australian economy include China's economic growth and global demand for resources.
Today, Australian Bureau of Statistics data on assets and liabilities of Australian securitisers for June 2008 is due.
M&A News
Centro (ASX:CNP) is only a month away from possible bankruptcy. The company said in the absence of a short-term recapitalisation solution it would seek to obtain longer-term debt extensions from its bankers beyond December 15. It is still in talks with a number of possible buyers of some assets from its Centro Australia Wholesale fund. Centro admits the sales could be crucial to convincing Australian banks and noteholders that it does have a strategic plan.
Bluescope Steel (ASX:BSL) will sell its New Zealand iron sands mining and export operation to Cheung Kong Infrastructure Holdings (HKG:1038) for $NZ250 million. The sale is expected to be completed in the fourth quarter of calendar 2008.
Important Corporate News
Store makeovers and cost controls helped push retailing giant Woolworths' (ASX:WOW) profit up 26% for 2008 but the company also said it expects slower profit growth this fiscal year. After tax profit earnings increased to A$1.62 billion and sales increased 10.3% to A$47 billion from last year.
Travel group Flight Centre Ltd (ASX:FLT) has lifted its annual profit by 18 per cent but says it expects earnings to grow at a slow pace this financial year. Net profit for the year ended June 30 was A$143.15 million, up from $120.82 million in the previous year.
Fosters Group Ltd (ASX:FGL) has reported an 88 per cent fall in annual profit but has declined to provide guidance for the 2009 financial year while the company conducts a strategic review continues of its wine operations. Fosters posted net profit for the 2008 financial year of A$111.7 million.
Suncorp Metway Ltd (ASX:SUN) has reported a 47.7 per cent slide in annual profit after frequent bad weather and choppy investment markets hammered its bottom line, but affirmed guidance for the current year. It matches the forecast delivered earlier this month for a 2007/08 net profit of A$556 million.
Contact
ABN Newswire Asia Bureau
Michelle Liang
TEL: +61-2-9247-4344 (#2)
EMAIL: michelle.liang@abnnewswire.net
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