Sydney, Sep 17, 2008 AEST (ABN Newswire) - The share market dropped almost 2% yesterday after Wall Street dropped 4% to its lowest close since the September 2001 terrorist attacks. A late rally among major banks and gains in resources stocks kept the local damage from the fall out from the Lehman Brothers collapse to a minimum. The losses were not as bad as expected but the combined losses of the past two days were significant.
The benchmark S&P/ASX200 index was down 66.9 points, or 1.39 per cent at 4750.8, while the broader All Ordinaries lost 75.2 points, or 1.54 per cent to 4799.8.
Overnight Wall Street, despite the turmoil in the financial sector, finished higher, although gold, silver, oil and copper were down.
At 7.07am, the Sydney Futures Exchange's September Share Price Index contract was 16 points higher at 4765.
Light, sweet crude for October delivery fell US$4.56 to settle at US$91.15 a barrel on the New York Mercantile Exchange, after earlier dipping to $90.51, its lowest level since February 8.
The Aussie dollar opened one US cent firmer today, starting the session above $US0.8000. But shortly after opening, the dollar fell again to hit $US0.7937/41 at 7.39am AEST as market concerns about the plight of the world's largest insurer, American International Group (AIG). AIG neared collapse overnight as a credit downgrade put the insurance giant into a death spiral that analysts said could deepen the global financial crisis.
Key Economic Facts and Figures
The Reserve Bank may have to cut interest rates harder than expected because the major banks may not pass on the full reductions to homebuyers due to the global credit crisis, senior economists predicted yesterday. The Reserve yesterday released the minutes of its September board meeting, where it cut interest rates for the first time in seven years. They showed that the board was torn between the risk of cutting rates too soon because an expected fall in inflation was still some time away and waiting too long, which could fuel a sharper slowdown in the economy.
The Reserve Bank of Australia governor Glenn Stevens speaks to the Australian Institute of Company Directors in Sydney.
Australian Bureau of Statistics international merchandise imports data for August will be released.
Westpac/Melbourne Institute will issue their index of economic activity for July, while the Australian Property Institute will release its 21st Australian Property Directions survey.
M&A News
Mining services and driller Boart Longyear (ASX:BLY) has acquired a US-based drilling specialist in a deal predicted to be immediately earnings accretive. Yesterday Boart said it would acquire United States-based Eklund Drilling Co, adding A$50 million in annual revenues and 31 rigs to its fast-growing fleet.
Infrastructure services group Cardno (ASX:CDD) has acquired engineering firm TBE Group for $US40.4 million ($A50.73 million) to expand into the US market. Cardno estimated about 1.86 million shares would be issued at a price of 5.28 Australian dollars to complete the transaction.
Midwest (ASX:MIS) will acquire the iron ore rights in a tenement owned by Montezuma Mining (ASX:MZM) that adjoins Midwest's landholdings in Western Australia's Robinson Range. Harbinger Capital Partners became the last crucial shareholder of Midwest Corporation to accept the takeover offer from China's Sinosteel, taking acceptances to 98.52 per cent.
Important Corporate News
West Australian Newspapers (ASX:WAN) has caved in to demands of its largest shareholder, Seven Network (ASX:SEV), and appointed the broadcaster's chairman Kerry Stokes and Peter Gammell to its board. WAN has until now resisted Seven's repeated requests for board representation to reflect its 22.4 per cent stake, up from its initial purchase of 14.9 per cent in October, 2006.
Yara International (OSL:YAR) has increased its stake in Australia's Burrup Holdings Ltd. (ASX:BOY) to 35% by buying a 5% share for A$141 million from private investor Pankaj Oswal, the Norwegian chemical and fertilizer company said Tuesday. Oswal now has 65% ownership of Burrup Holdings. The purchase will strengthen Yara's contractual rights to downstream upgrading and marketing from Burrup, said Yara president and CEO Thorleif Enger.
Contact
Michelle Liang
Asia Business News Asia Bureau
TEL: +61-2-9247-4344
EMAIL: michelle.liang@abnnewswire.net
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