Australian Market Report of December 3: A Day with Good News

Sydney, Dec 3, 2008 AEST (ABN Newswire) - Overnight the US stocks rebounded on some good news, as the General Electric posted a better than expected update and investors hoped for government's bailout for the carmakers.

Yesterday the Australia market closed lower dragged by resource sector although the central bank's aggressive rate cut of 100 basis points lifted some sentiment in late trading. The benchmark S&P/ASX200 index closed down 153 points, or 4.16 per cent, at 3,528.2, while the broader All Ordinaries index was 145.6 points, or 4.02 per cent, lower at 3,473.4. Analysts anticipate a rise today in local market with positive lead from the US and the RBA rate cut.

Today at 0835 AEDT on the Sydney Futures Exchange, the December Share Price Index futures contract was up 70 points at 3,642.

The Australian dollar opened firmer as a mild recovery on Wall Street assisted the relatively high-yielding currency. At 0700 AEDT, the Australian dollar was trading at $US0.6393/97, up from Tuesday's close of $US0.6357/60.

Oil prices sank on Tuesday amid deepening worries about a global slowdown, closing $US100 below their record peaks reached less than four months ago. New York light sweet crude for January dropped $US2.32 to close at $US46.96, the first time the benchmark contract has settled below $US47 since May 2005.

Key Economic Facts and Figures

The Reserve Bank has slashed interest rates by 100 basis points to 4.25 per cent. Economists expect more cuts will be on the way if there is more negative data. RBA governor Glenn Stevens said although government and central bank stimulus packages had begun to take effect, with inflation likely soon start to fall.

Analysts are predicting gross domestic product (GDP) will have grown by 0.2 per cent in the three months to the end of September, taking the annual growth rate to 1.9 per cent. The mid-year economic and fiscal outlook, released last month, predicted growth would slow to two per cent in 2008-09.

Australian Bureau of Statistics figures show that amid the downturn in Australia monthly retail sales unexpectedly increased a seasonally adjusted 0.7% in October, from a revised 1% contraction in September. Analysts expected retail sales to shrink by 0.2% in October.

Today the Australian Industry Group/Commonwealth Bank of Australia will release their Performance of Services Index for November, and the Australian Bureau of Statistics issues national accounts data for the September quarter.

M&A News

British Airways(LON:BAY) has confirmed that it is in merger talks with Qantas(ASX:QAN). A Qantas merger with British Airways may ensure the Australian airline remains competitive, Foreign Affairs Minister Stephen Smith says. The federal government indicated it was considering lifting from 35 per cent to 49 per cent the holding foreign airlines can have in Qantas.

Swiss trading house Glencore International has boosted its stake in Minara Resources(ASX:MRE) to 70.6 per cent after mopping up the substantial shortfall in the struggling WA nickel miner's A$210 million rights issue.

Wall Street investment bank Morgan Stanley revealed it had increased its stake in OZ Minerals(ASX:OZL) to 6.89 per cent. OZ Minerals said it did not comment on market speculation.

Takeover target Incremental Petroleum(ASX:IPM) says it will respond soon to an A$83.7 million takeover bid by its joint venture partner -- Texan oil explorer TransAtlantic Petroleum Corporation(TSE:TNP). Cooper Energy(ASX:COE), another potential Incremental suitor, may launch a new bid after its initial scrip offer failed early last month.

Paladin Energy(ASX:PDN) has lodged a takeover bid for mineral explorer Fusion Resources(ASX:FSN), whose assets include the Valhalla North uranium project in northern Queensland. The bid values Fusion at A$17.8 million and has been recommended by the company's directors.

Important Corporate News

Commonwealth Bank of Australia(ASX:CBA) and National Australia Bank(ASX:NAB) have rushed to pass on the full one percentage point rate cut announced by the Reserve Bank of Australia. But Westpac(ASX:WBC) and ANZ(ASX:ANZ) will pass on 0.8 percentage point of the reduction, saying wholesale funding levels remain at a record high.

Rio Tinto(ASX:RIO) yesterday continued to slash proposed spending in the light of its huge debt and sagging world economic growth. Rio announced a major staff cut at its Mongolian copper joint venture.

Electronic goods retailer JB Hi-Fi (ASX:JBH) has announced it will continue with plans to open 24 new stores by the middle of next year, despite the economic slowdown. The rollout will increase JB Hi-Fi's network to 129 stores by the end of June.

1. Related Stocks - Mid Market (AEST 1230)

-------------------------------------------------Code   % Change   Volume     Turnover  Low   High-------------------------------------------------ASX:QAN +5.77  8,041,123  $19,504,439   237   247ASX:WBC +1.18  7,803,893  $136,508,355  1601  1668ASX:RIO -7.1   5,367,299  $232,284,320  3565  3925ASX:ANZ        4,507,334  $64,205,115   1385  1436ASX:NAB +.85   2,867,820  $56,496,600   1861  1945ASX:PDN +3.65  1,398,430  $3,210,156    223   235ASX:MRE -1.33  612,888    $232,233      36    39.5ASX:COE -4.76  320,535    $64,475       20    21ASX:JBH +5.83  115,819    $958,718      810   842ASX:FSN +47.82 222,980    $77,293       32    35ASX:IPM -1     57,501     $56,638       98.5  98.5

2. Top 10 ASX on Turnover - Mid Market (AEST 1230)

-------------------------------------------------Code   % Change   Volume     Turnover  Low   High-------------------------------------------------ASX:BHP +2.88  10,380,801 $294,369,998  2736  2865ASX:RIO -7.05  5,368,520  $232,328,568  3565  3925ASX:WBC +1.18  7,808,169  $136,578,011  1601  1668ASX:CBA -.44   2,081,401  $67,449,226   3058  3230ASX:ANZ +.28   4,507,534  $64,207,913   1385  1436ASX:NAB +.85   2,867,820  $56,496,600   1861  1945ASX:TLS -.48   12,406,975 $51,385,394   407   421ASX:QBE -1.83  1,852,784  $44,245,381   2304  2500ASX:NCM +.93   1,660,322  $43,331,317   2577  2662ASX:WPL -1.35  1,101,300  $40,069,683   3128  3365

Contact

Michelle Liang Asia Business News Asia Bureau Tel: +61-2-9247-4344 Email: michelle.Liang@abnnewswire.net