Sydney, Oct 17, 2008 AEST (ABN Newswire) - Overnight Wall Street gained in a late rally early this morning, as investors snapped up beaten-down shares after Wall Street's worst day since the 1987, and consumer companies gained as the price of oil fell.
Yesterday, Australian shares fell nearly seven per cent, wiping off another $86 billion in market value, as investor fear the troubled US economy and global credit crisis would drag the world into recession. Resources stocks were hit hard on the back of lower commodity prices and an expectation that demand for commodities would fall further.
The benchmark S&P/ASX200 index dropped 286.6 points, or 6.67 per cent, to 4,013.4, while the broader All Ordinaries index fell 284.4 points, or 6.66 per cent, to 3988.1.
At 0758 AEDT, the December Share Price Index futures contract on the Sydney Futures Exchange was up 206 points at 4,233.
The Australian dollar jumped, echoing the recent burst of optimism overseas. Today the Australian dollar opened 3.9% firmer, as a rebound in Wall Street from bargain seekers and lower oil prices dragged the local currency higher. At 7am, the Australian dollar was trading at $US0.6913/16, up from yesterday's close of $US0.6650/58.
Oil prices skidded again today, with New York crude closing below $US70 a barrel for the first time since August 2007. New York's main futures contract, light sweet crude for November delivery, dropped $US4.69 to close at $US69.85.
Key Economic Facts and Figures
Financial markets are tipping a 2.25 percentage point cut in official interest rates by Easter as fears for the global economy cause further havoc on share markets. Prime Minister Kevin Rudd is scheduled to meet with business leaders today in Sydney to discuss plans for a united response to the global financial crisis.
Figures from the Reserve Bank of Australia (RBA) showed that while the average credit card balance increased 4.6 per cent in the 12 months to August to A$3,141, it was the slowest pace of growth since records began 14 years ago.
The Australian Bureau of Statistics releases its international trade price indices for the September quarter.
The Melbourne Institute releases its October bulletin of economic trends for the next four quarters.
M&A News
National Australia Bank(ASX:NAB) may be preparing to join the battle for Suncorp's(ASX:SUN) banking operations amid speculation that it will try to raise more than A$2 billion from investors later this month. Yesterday the bank signalled its plans to raise more capital from local and overseas investors to strengthen its balance sheet. Suncorp is expected to put its banking business on the market again early next year.
Woolworths(ASX:WOW) will drop its move to appeal a New Zealand court ruling blocking it from bidding for The Warehouse(NZE:WHS) as the competition issue in the case was no longer relevant. Woolworths, which owns a 10% stake in Warehouse as does its potential rival suitor, Foodstuffs, said it has made no decision on its stake or a potential takeover bid.
West Perth-based Augustus Minerals Ltd(ASX:AUJ) has offloaded its 19 per cent interest in a Kazakhstan project for over A$2 million in a bid to focus on its Western Australian project. The company said it will sell the stake to its joint venture partner Cigma Metals Corporation for $US1.5 million.
Important Corporate News
Macarthur Coal Ltd(ASX:MCC) has forecast a profit of up to A$160 million in the half year to the end of December 2008. The coal miner said profit for the first half of fiscal 2009 is likely to be in the range of A$150 million to A$160 million, underpinned by higher coal prices and increased sales. Macarthur reported net profit of A$13.5 million in the previous corresponding half.
Ten Network(ASX:TEN) has refused to give earnings guidance after a terrible fourth quarter triggered a 24.7% fall in annual earnings. Ten's normalised net profit after tax fell to A$89.6 million for the year to August 31. The company said its Ten television network had been on track for a positive year, posting a 13% jump in operations earnings and 7% revenue increase in the nine months to May, before its dramatic last-quarter slump.
National Australia Bank Ltd(ASX:NAB) yesterday said it expects annual cash earnings to fall 11 percent to A$3.9 billion when official results are posted next week. Full-year net profit for the same fiscal year rose 4.2 percent to a record A$4.58 billion.
Contact
Michelle Liang
Asia Business News Aisa Bureau
Tel: +61-2-9247-4344
Email: michelle.Liang@abnnewswire.net
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