Sydney, Nov 25, 2008 AEST (ABN Newswire) - Wall Street rallied as the US government planned to take a US$20 billion stake in banking giant Citigroup and guarantee billions of dollars of risky assets. The European stock markets also soared as on British government's economic stimulus package to reignite consumer spending.
Yesterday Australian shares closed slightly higher after staging a late-afternoon rally as Washington promised to shore up Citigroup. Miners surged while banks pared their losses. The benchmark S&P/ASX200 index rose 0.25%, or 8.6 points, to close at 3425.1, while the All Ordinaries index was up 0.1%, or 1.9 points, at 3388.8. Analysts anticipate the markets a stronger performance with the good news.
The December Share Price Index futures contract on the Sydney Futures Exchange was up 144 points, or more than 4%, at 3600 in recent trading.
The Australian dollar has opened higher after news the US government would rescue troubled US bank Citigroup and a massive UK stimulus package lifted investor appetite for riskier assets. At 0700 AEDT, the Australian dollar was trading at $US0.6477/81, up 1.9 US cents, or 3.1 per cent from Monday's close of $US0.6283/91.
Oil prices roared higher towards $US55 in Monday trade as equity markets surged on government action aimed at tackling a severe economic downturn. Light sweet crude for delivery in January was up $US4.57 to $US54.50 a barrel on the New York Mercantile Exchange.
Key Economic Facts and Figures
Economists expect the RBA to cut the cash rate by a massive 125 basis points after its next board meeting on December 2. That would be the biggest one-month cut in official rate since the onset of the 1990 recession. A 125-basis-point rate cut next month would take the cash rate to 4 per cent.
The Australian central bank absorbed A$3 billion from banks and financial institutions on Monday as part of its domestic money market operations. Under the 14-day term-deposit facility offered, the Reserve Bank of Australia (RBA) said it will pay a weighted average spread of 0.1 basis points below the 5.25 percent cash rate.
M&A News
PBL Media's private equity owner, CVC Asia Pacific(ASX:CVC), has offered a A$445 million refinancing package to save the struggling company from collapsing under its A$4.2 billion debt load. The buyout firm has four weeks to convince more than two-thirds of about 70 lenders to PBL Media to agree to the proposal.
Important Corporate News
Insurance Australia Group Ltd.(ASX:IAG) has formed joint venture with State Bank of India to set up a new nonlife insurance company in India next year. IAG initially will hold 26% of the joint venture. The Australian insurer said it has an option to increase its stake to 49% in the future, subject to regulatory approval and other conditions.
Australian retailer Harvey Norman(ASX:HVN) expects to report a 31.5% fall in first-quarter profit as sales continue to fall and retail margins remain under pressure, the company said. Unaudited preliminary accounts for the period from July 1 to September 30 indicate profit before tax and minority interests of A$71 million, compared to A$103.6 million for the corresponding prior period.
STW Communications Group(ASX:SGN) said yesterday that the company's earnings per share and profit would be down this year due to marketing budget cuts by their clients. It predicted net profit would be down 6.3 percent to A$39 million for 2008 and that earnings per share would drop 4.3 percent to 20.1 cents this year.
Agribusiness Ruralco(ASX:RHL) says financial market turmoil has not impacted on its customers and is providing acquisition opportunities for the group. Ruralco yesterday delivered a 43 per cent increase in annual profit for fiscal 2008 despite a second year of drought in much of its footprint.
Prime Financial Group Ltd (ASX:PFG) warned that this year's net profit could be down 25pc to 30pc from the A$6.8m net profit of 2008.
Qantas(ASX:QAN) warned today profits would fall by nearly two thirds this year and plans further cuts in capacity amid weakening demand. The airline expects profit before tax of around A$500 million for the year to June 30, 2009, down from A$1.41 billion last year.
Melbourne toll road operator ConnectEast Group(ASX:CEU) is to launch a A$450 million capital raising and says it will reduce distributions, as capital markets remain weak and traffic volumes lower than forecast. The company says the two initiatives will help it reduce debt and interest costs.
1. Related Stocks - Mid Market (AEST 1230)
----------------------------------------------------Code % Change Volume Turnover Low High----------------------------------------------------ASX:QAN +.43 5,969,926 $13,816,803 217 235ASX:IAG +2.8 2,926,196 $10,952,682 367 380ASX:HVN -10.65 2,643,823 $5,910,749 213 240ASX:SGN +.81 58,534 $36,080 61.5 62.5ASX:RHL +4.62 3,047 $10,225 332 339
2. Top 10 ASX on Turnover - Mid Market (AEST 1230)
----------------------------------------------------Code % Change Volume Turnover Low High----------------------------------------------------ASX:BHP +9.92 17,148,083 $450,647,766 2550 2658ASX:MQG +7.73 2,944,935 $134,461,202 2885 3022ASX:RIO +6.35 1,872,220 $122,383,339 6310 6560ASX:WBC +.54 6,516,709 $110,615,835 1644 1704ASX:TLS +2.97 23,400,351 $97,196,906 411 418ASX:CBA +3.6 2,776,410 $92,403,409 3107 3218ASX:ANZ +7.28 6,463,740 $90,845,595 1351 1405ASX:NAB +3.77 4,382,998 $86,596,277 1936 1977ASX:WPL +11.63 2,157,480 $73,490,031 3280 3450ASX:NCM +5.42 2,087,014 $54,330,854 2466 2585
Contact
Michelle Liang
Asia Business News Asia Bureau
Tel: +61-2-9247-4344
Email: michelle.Liang@abnnewswire.net
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