Sydney, Sep 4, 2008 AEST (ABN Newswire) - Yesterday the Australian share market was dragged down by a 6% fall in Rio Tinto and broad-based weakness across the resources sector on falling commodity prices and a weak US lead. The benchmark S&P/ASX200 was down 56 points, or 1.1%, to 5060, while the broader All Ordinaries had lost 64.5 points, or 1.2%, to 5130.5.
The Australian dollar has opened firmer yet at its lowest opening in 11 months. At 7am, the Australian dollar was trading at $US0.8359/64, up from yesterday's close of 0.8282/86.
Oil prices went lower on Wednesday as a stronger US dollar and slowing demand for crude oil. Light, sweet crude for October delivery fell 36 cents to settle at $US109.35 a barrel on the New York Mercantile Exchange, after earlier dipping as low as $US107.22.
At 7.07am on the Sydney Futures Exchange, the September share price index futures contract was flat at 5082, which is higher than yesterday's close.
Key Economic Facts and Figures
Gross domestic product (GDP) rose by 0.3 per cent in the June quarter, in real, seasonally adjusted terms, national accounts data from the Australian Bureau of Statistics (ABS) showed. It was the weakest quarterly growth in more than three years, paring annual GDP growth from 3.3 per cent to just 2.7 per cent. For the first time since 1993, household spending actually fell by 0.1 per cent.
Economists say a significant drop in the rate of economic growth, announced by the Australian Bureau of Statistics yesterday, was in line with expectations and would not motivate the Reserve Bank of Australia to bring forward the next interest rate cut, expected in November.
The Australian Finance Group (AFG) mortgage index shows the number of mortgages sold fell by 17 per cent per cent to 5,770 in August, after robust growth in July. Volumes slipped 20 per cent to A$1.91 billion and fell below A$2 billion for the first time since in almost two years, or since December 2006.
In its VFACTS sales bulletin the Federal Chamber of Automotive Industries (FCAI) said 77,324 new vehicles were retailed last month, a 12.3 per cent slide compared with the 88,206 sold in August last year. It is said that 703,995 vehicles had been retailed to the end of August, 5,122 or 0.7 per cent more than at the same time last year.
In news today, the Australian Bureau of Statistics releases its international goods and services trade data for July. Seek releases its employment index.
M&A News
Solomon Lew's Premier Investments has finally succeeded in its takeover of Just Group(ASX:JST), with the fashion retailer delisting from the stock exchange. Mr Lew plans to implement changes, with all former directors of Just removed. A Premier Investments spokeswoman said the review would be starting shortly, once the company acquired 100 per cent ownership of Just.
The European Commission has put its review on hold seeking further information from BHP Billiton(ASX:BHP) on the proposed merger with Rio Tinto(ASX:RIO), meaning its final decision is likely to be pushed out from December 9 to some time around Christmas. Meanwhile, Chinalco (Chalco SHA:601600) chairman Xiao Yaqing left open the possibility of the Chinese aluminium giant selling its 9 per cent stake in Rio under BHP's offer.
Important Corporate News
Australand(ASX:ALZ) has raised A$461 million in one of the largest capital raisings in the property industry this year. Australand raised A$302 million from its largest shareholder, Singapore's CapitaLand, which lifted its stake from 54 to 59.3 per cent. The balance was raised from institutional and retail investors in Australia.
More than A$2 billion was wiped from Andrew Forrest's Fortescue Metals Group (ASX:FMG) yesterday as brokers like Commonwealth Securities engaged in short-selling of the stock. On Tuesday, Fortescue went on the offensive against short sellers, noting that a registry search had revealed that 10 per cent of its shares were on loan - presumably to hedge funds shorting the stock. Most of the shares appear to have come from Philip Falcone's Harbinger Capital.
Troubled investment firm Babcock & Brown(ASX:BNB) has appointed John Fanning as chief financial officer to replace Michael Larkin, who became chief executive last month.
Contact
Michelle Liang
Asia Business News Asia Bureau
Tel: +61-2-9247-4344
Email: michelle.Liang@abnnewswire.net
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