Australia Follows Global Trend, Markets Sell Off

Headlines

Miners break through bottlenecks – Despite bottlenecks at the ports, the Australian miners a managing to get the goods through. Next year’s income from mining industry is supposed to increase by $10 billion according to the Australian Bureau of Agricultural and Resource Economics (ABARE). Leading ABARE analysts expect the commodity prices remain firm. The improvements at Queensland and NSW ports will allow lifting Australia’s total coal exports to 260 million tonnes. Port expansions are facing fierce opposition of environmentalists in Australia as well as in Europe, resulting in long queues of ships in major ports. Source: The Australian.
http://www.theaustralian.news.com.au/story/0,20867,21967205-5005200,00.html

ANZ may sell Origin mortgage business – ANZ Banking Group committed to a strategic review of its mortgage distribution business Origin Mortgage Management Services as it has been approached by “third parties” with propositions to sell the unit. Origin currently has one of the largest networks of mortgage managers and around 40,000 loans with a net worth circa $7 billion. As the acquisition opportunities in Australia are regarded as limited, it is looking for expansion in Asia. Source: Herald Sun.
http://www.news.com.au/heraldsun/story/0,21985,21971126-5012062,00.html

Boom spurs exploration – The minerals and energy exploration spending jumped to double the average in the past 25 years due to the China driven commodities boom. There are some concerns that many of the exploration efforts might miss the high commodity prices and will leave a negative imprint on companies’ bottom lines. Furthermore, it is unclear whether the costs were driven by the rising labor and equipment cost or the actual amount of exploration done. Despite these pessimistic claims, the overall sentiment remains positive, as the Australian mining industry appears to be very strong and growing at unprecedented levels, helping to boost country’s economy. The largest exploration projects this year were $433 million expansion of the Dampier-Bunbury Natural Gas pipeline and $382 million expansion of Rio Tinto’s Pilbara iron ore. The next year’s driver of the expansion figure will be Woodside’s Pluto LNG project with an expected cost of up to $10 billion that the company has already committed to. Source: The Australian
http://www.theaustralian.news.com.au/story/0,20867,21967205-5005200,00.html

Currency

Australian dollar saw some disappointing news as the HIA New Home Sales printed negative 4.4% versus prior positive 7.7%. The analysts say that despite the country’s strong economic growth, the increasing prices are making housing less affordable for many Australians. Various sources blamed the unstable US sub-prime mortgages for the quiet morning. The decline in stocks is expected to boost investors’ appetite for higher yielding assets, withdrawing their investments from Australia and New Zealand. The Aussie traded between 0.8450 and 0.8479 today.

Stock Market

Today’s slide of the ASX index was largely attributed to bad news coming from the US. James Hardie, the biggest supplier of home siding in the US fell 1%. Despite an optimistic ABARE report, BHP Billiton was leading the ASX drop, sliding 0.4%. Westfield Group, a property trust that invests in and leases retail shopping centers in Australia, US and US slid 1.2%. National Australia Bank is closing the lead of today’s market losers with a 0.6% price drop. The index closed at 6308.6, down 21.2 points.

Bond Market

The bond yields fell at the market open, following the US lead, but then recovered slightly. The recovery was attributed to the carry traders sell-off by some analysts.