Sydney, Sep 16, 2008 AEST (ABN Newswire) - Wall St closed down over 4% overnight as the US investment bank Lehman Brothers filing for bankruptcy. Yesterday, with rumours surrounding Lehman Brothers yet to be confirmed, the Australian share market finished down over 1.5 per cent. Analysts expect the Australian dollar may fall even further today with negative lead from Lehman Brothers demise and the fire sale of Merrill Lynch.
On Monday, the benchmark S&P/ASX200 index closed 86.1 points, or 1.76%, lower at 4817.7, while the broader All Ordinaries lost 82.1 points, or 1.66%, to 4875.
At 6.45am, the Sydney Futures Exchange's September Share Price Index contract was 135 points lower at 4692.
Oil prices have closed below US$100 a barrel for the first time in six months Monday, tumbling in another dramatic sell-off as the bankruptcy of Lehman Brothers and the sale of Merrill Lynch deepened worries about the US economy. Crude prices shed more than US$5 to settle at US$95.71 a barrel, losing virtually all their gains for the year.
The Australian dollar opened one US cent weaker today after the major investment bank's record filing for bankruptcy sparked worries about a global slowdown. At 7am, the Australian dollar was trading at $US0.8065/69, down from yesterday's close of $US0.8167/71.
Key Economic Facts and Figures
Yesterday the Reserve Bank of Australia injected over A$2 billion into the banking system due to concerns over the negative effect on the market of the failure of United States investment bank Lehman Brothers. Its collapse has triggered large stockmarket falls around the globe and increased the chances of another official interest rate cut in Australia. Another major Wall Street bank, Merrill Lynch, was sold yesterday for a discount price of $US50billion ($A61billion) to the Bank of America.
The construction of new homes have fallen for the second quarter in a row, confirming a softening in the housing market since the start of 2007 due to high interest rates. New home building starts fell by 3.7 per cent to 38,348 units, seasonally adjusted, in the June quarter, the Australian Bureau of Statistics (ABS) said yesterday.
The Reserve Bank of Australia will release the minutes from its last meeting.
M&A News
Sinosteel is set to gain 100 per cent of iron ore miner Midwest (ASX:MIS) after US investor Philip Falcone agreed to the A$224 million sale of his shares into the Chinese company's hostile bid. Falcone's hedge fund Harbinger Capital Partners has accepted the A$6.38 a share offer for his 16.2 per cent stake in the company, with Sinosteel set to announce it has moved beyond a 97 per cent stake. Successful in the first hostile Chinese takeover of an Australian company, Sinosteel is now expected to move to compulsory acquisition of Midwest.
Concord Capital has increased its stake in forest products company Gunns (ASX:GNS) from 10.65 percent to 12.86 percent. Gunns director Robin Gray acquired 100,000 Gunns shares at A$139,094, for a total holding of 372,667 shares.
Aurora Energy (TSE:AXU) is close to acquiring Babcock and Brown Power's (ASX:BBP) Tamar Valley power station. The Australian Competition and Consumer Commission has accepted undertakings from Aurora and the Tasmanian government and will transfer ownership to Aurora once the acquisition is completed.
Important Corporate News
Centro Properties Group (ASX:CNP) announced yesterday that a US$714 million deal to sell the Centro America Fund would not proceed. The buyer terminated the agreement after Centro refused to accept a much lower price for the asset. Credit Suisse analysts said market conditions had made it tougher to close the deal. By the end of this month Centro must satisfy Australian lenders and US noteholders that it can implement a rescue plan before another December 15 deadline, when it is due to repay $US450 million.
Troubled investor and funds manager Octaviar Ltd (ASX:OCV) and three of its subsidiaries have gone into voluntary administration. Creditors will meet within five days to discuss whether Octavier should be restructured or wound up.
Contact
Michelle Liang
Asia Business News Asia Bureau
TEL: +61-2-9247-4344
EMAIL: michelle.liang@abnnewswire.net
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