Australian Market Report of February 4: Bleak Jobless Rate Forecast

Sydney, Feb 4, 2009 AEST (ABN Newswire) - US Stocks closed higher overnight on some encouraging corporate earnings, better-than-expected housing report and the progress of the new Obama government's stimulus plan.

The Australian share market closed higher on Tuesday, as the central bank's interest rate cut bolstered the financial stocks. The benchmark S&P/ASX200 index ended up 11.3 points, or 0.32 per cent, at 3,508.7 while the broader All Ordinaries index was 5.6 points stronger, up 0.16 per cent, at 3,449.1. Today investors may focus their attention on the earnings report of BHP Billiton and the decision by the four major banks after RBA's rate cut.

At 0822 AEDT on the Sydney Futures Exchange, the March SPI futures index was 27 points higher at 3,480.

Today the Australian Industry Group and the Commonwealth Bank release their Australian Performance of Services Index for January.

The Australian Bureau of Statistics releases retail trade trends and building approvals data for December.

Key Economic Facts and Figures

Yesterday the RBA slashed the interest rate by 100 basis points to 3.25% from 4.25% in an effort to restore confidence in business and housing market. Before RBA's announcement, the Rudd Government said it will pour an extra A$42 billion into the economy in its latest bid to head off a recession.

Government's latest unemployment forecast is expected that more than 300,000 Australians will lose their jobs in the next 18 months. The jobless rate could hit 7 per cent next year, taking the number out of work to almost 800,000. Economists anticipate a bleaker unemployment rate in 2010 and believe the government stimulus plan is not enough to reverse the streak.

M&A News

Speculation has arisen that Canada's CanWest Global Communications (TSE:CGS) will again attempt to offload its stake in the Ten Network (ASX:TEN).

Commonwealth Bank (ASX:CBA) and Westpac (ASX:WBC) are believed to be eyeing the loans book of Franco-Belgian bank Dexia (EBR:DEXB), which is planning to quit the Australian market because of deepening losses at home.

Important Corporate News

BHP Billiton (ASX:BHP) said today its first-half net profit fell 56.5 per cent due to big impairment charges and weaker demand. Net profit slid to $US2.62 billion in the six months ended December 3, compared to $US6.02 billion in the corresponding period a year earlier.

All four major banks will pass on yesterday's official interest rate cut in full. The CBA has announced it would cut its standard variable mortgage rate by 100 basis points. The new rate will be 5.74%, effective February 13. NAB (ASX:NAB) mortgage rates will drop to 5.74% on February 13, but the bank has said it may not be able to match future official interest rate cuts. Westpac and ANZ (ASX:ANZ) announced 100 basis point cuts to their standard variable home loan rates on Tuesday, both taking standard variable home loan rates to 5.91%.

Qantas Airways' (ASX:QAN) first-half profit slumped 66 per cent as fuel and labour costs buffeted Australia's biggest airline. Qantas will today announce a bold equity raising of about A$500 million.

Westfield Group Ltd. (ASX:WDC) plans to sell A$2.9 billion in new securities to institutional investors to repay debt. The company also cut both its operational segment earnings and distribution per security forecasts this calendar year for the second time in two weeks.

David Jones Ltd (ASX:DJS) posted the total sales for the first half fiscal year fell 6.5pc to A$1.062bn from A$1.136bn on the comparable period last year.

West Australian Newspapers Holdings (ASX:WAN) yesterday forecast a fall in full-year reported net profit to A$100 million to A$108 million from the A$109.9 million it booked for 2007-08.

Contact

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