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A global sell-off on international equity markets saw Australian shares slump 1% to close out the 2010 financial year, recovering from being down over 2% at the open. The last twelve months have been known for high volatility and despite a strong start to the year in July and August last year, markets have generally moved sideways since.

Overall, however, the market is around 8.8% above the close this time last year.

Focusing on today’s retreat, the decline also took a bite out of the Aussie dollar, which has fallen more than 2c in the last 24 hours. On the last day of the financial year, disappointing economic data also hit the market. According to the Housing Industry Association, new home sales fell 6.4% in May from April, largely attributed to an increase in interest rates. Meanwhile, the Bureau of Statistics said job vacancies fell 2.8% to 164,600, seasonally adjusted, in the quarter to May, from the previous corresponding period. The largest contributor to the slump was the public sector, which saw vacancies plummet 12.3%.

At the close on 30 June 2010, the All Ords lost 45.8 to 4,324.8, while the ASX/200 retreated 44.2 to 4,301.5. Around 2.5 billion shares worth around $5.4 billion had changed hands. Materials and Resources stocks were heavily sold across the world, and that was the story in Australia, with the sector down 1.5%. BHP Billiton and Rio Tinto lost 45c and $1.76 to $37.65 and $66.66 respectively. The latter said it had increase increased its stake in Mongolian focused miner, Ivanhoe Mines to 29%. Fortescue slumped 19c to $4.12. CEO Andrew Forrest overnight said that the mining industry was within 24 hours of an agreement with the previous Prime Minister, Kevin Rudd, before he was thrown out of office. Steel stocks, Bluescope and Onesteel retreated 2.8% and 2.6% respectively. The gold stocks were virtually flat, a strong result in the face of widespread losses across much of the market. The Energy sector followed the miners lower, losing 0.7% of its own. Woodside Petroleum retreated 73c to $41.84. Oil Search lost 1.1% to $5.53, while Origin reversed morning losses to finish up 18c to $14.94. Coal miners were mixed. Whitehaven gained 0.6%, despite being down 3.6% at lunch.

Meanwhile, Centennial Coal and New Hope Corporation lost 2.4% and 1.6% respectively.

Among the big four banks CBA lost the most ground, down 74c to $48.64, while ANZ, Westpac and NAB lost between 0.1% and 1.2%. The broader Banks and Financials sector lost 1.1%. Under siege Macquarie tumbled another 96c, or 2.5% to $37.12 in the face of self-described difficult trading conditions for some of its businesses. Most of the major insurers recovered from losses of between 1% and 2.6% at lunch. IAG and Suncorp-Metway were unchanged, while AXA Asia Pacific edged 2c higher to $5.47. The Property Trusts sector, which often trades counter to the broader market, slumped 1.9%. Westfield was down 27c to $12.18, while Mirvac and GPT Group were down 3% and 2.8% respectively. Industrial stocks sank 1.6%.  Qantas lost 3c to $2.20, despite carrying 5.6% in May compared to the previous May. Virgin Blue lost 3.3%. Transport logistics company Asciano and Toll gave up 5c and 7c respectively to $1.62 and $5.48 respectively. Engineering and construction company, Downer EDI sold off its final 49% stake MB Century Drilling, however after paying back shareholders and other costs, would only gain around $5 million. The company’s shares fell 14c to $3.60. Brambles lost 12c to $5.46, while Leighton retreated 56c to $28.95. Elsewhere, the Consumer Discretionary sector was 0.8% lower.  Myer and Harvey Norman were both down 6c to $3.16 and $3.31. It wasn’t all negative for the retailers however with David Jones and Billabong up 6c and 10c to $4.31 and $8.74 respectively. Losses were also seen among media plays, led by Fairfax, which slumped 1.9% to around $1.315 per share. Consumer Staples stocks retreated 0.2%. Wesfarmers and Woolworths gave up 22c and 2c to $28.65 and $27.02 respectively.  The Utilities sector was one of the stronger performers, up 1.2% at the close. AGL Energy was 33c higher $14.70. On the other hand, Telstra retreated 3c to $3.25, leading the broader Telecommunications sector to lose 0.6%. Around the region, the Nikkei 225 lost 188.0 to 9,382.6, the Straits times Index lost 12.1 to 2,818.2 and the NZSE50 retreated 19.0 to 2,972.1. The Hang Seng retreated 119.6 to 20,129.3 Spot gold was trading at US$1,241.35 per ounce, while the Aussie was buying US$0.8506.

A global sell-off on international equity markets saw Australian shares slump 1.7% by lunch. Despite the decline, investors may count themselves lucky with the SPI futures pointing to larger losses before the open and European markets losing around twice as much ground.

The slump also took a bite out of the Aussie dollar, which has fallen more than 2c in the last 24 hours.

On the last day of the financial year, disappointing economic data also hit the market. According to the Housing Industry Association, new home sales fell 6.4% in May from April, largely attributed to an increase in interest rates.

Meanwhile, the Bureau of Statistics said job vacancies fell 2.8% to 164,600, seasonally adjusted, in the quarter to May, from the previous corresponding period. The largest contributor to the slump was the public sector, which saw vacancies plummet 12.3%.

At midday, the All Ords lost 75.6 to 4,295, while the ASX/200 retreated 73.9 to 4,271.8. Around 1.1 billion shares worth around $2.1 billion had changed hands.

Materials and Resources stocks were heavily sold across the world, and that was the story in Australia, with the sector down 2.3%.

BHP Billiton and Rio Tinto lost 83c and $2.26 to $37.27 and $66.16 respectively. The latter said it had increase increased its stake in Mongolian focused miner, Ivanhoe Mines to 29%.

Fortescue slumped 21c to $4.10. CEO Andrew Forrest overnight said that the mining industry was within 24 hours of an agreement with the previous Prime Minister, Kevin Rudd, before he was thrown out of office.

Steel stocks, Bluescope and Onesteel retreated 3% and 2.6% respectively.

The gold stocks were virtually flat, a strong result in the face of widespread losses across much of the market.

The Energy sector followed the miners lower, losing 1.4% of its own. Woodside Petroleum retreated 87c to $41.70.

Oil Search lost 0.7% to $5.55, while Origin was down 5c to $14.71.

Coal miners were also down, with Whitehaven, Centennial Coal and New Hope Corporation slumping 3.6%, 4.6% and 2.2% respectively.

Among the big four banks CBA lost the most ground, down 92c to $48.46, while ANZ, Westpac and NAB lost between 1.1% and 1.7%.

The broader Banks and Financials sector lost 1.8%.

Under siege Macquarie tumbled another $1.66, or 4.4% to $36.42 in the face of self-described difficult trading conditions for some of its businesses.

All the major insurers were down between 1% and 2.6%.

The Property Trusts sector, which often trades counter to the broader market, slumped 1.7%.

Westfield was down 26c to $12.19, while Mirvac and GPT Group were down 3% and 2.1% respectively.

Stockland and Goodman Group however capped losses, albeit with only very modest gains.

Industrial stocks sank 2%.

Qantas lost 3c to $2.20, despite carrying 5.6% in May compared to the previous May. Virgin Blue lost 2.5%.

Transport logistics company Asciano and Toll gave up 3.5c and 11c respectively to $1.635 and $5.44 respectively.

Engineering and construction company, Downer EDI sold off its final 49% stake MB Century Drilling, however after paying back shareholders and other costs, would only gain around $5 million.

The company’s shares fell 15c to $3.59.

Brambles lost 19c to $5.39, while Leighton retreated 65c to $28.86.

Elsewhere, the Consumer Discretionary sector was 1.5% lower.

Myer and Harvey Norman were 8c and 4c lower $3.14 and $3.33.

It wasn’t all negative for the retailers however with David Jones and Billabong up 4c and 18c to $4.29 and $8.83 respectively.

Many of the gamers, including Aristocrat, Tabcorp and Crown were down between 0.6% and 1.1%.

Losses were more pronounced among media plays, led by Fairfax, which slumped 4.3% to around $1.28 per share.

Consumer Staples stocks retreated 0.9%.

Wesfarmers and Woolworths gave up 27c and 16c to $28.60 and $26.88 respectively.

The Utilities sector was one of the stronger performers, just 0.4% down at lunch.

AGL Energy was 9c higher $14.46.

On the other hand, Telstra retreated 3c to $3.25, leading the broader Telecommunications sector to lose 0.6%.

Around the region, the Nikkei 225 lost 204.6   to 9,366.1, the Straits times Index added 27.4 to 2,802.9 and the NZSE50 retreated 30.4 to 2,960.6.

Spot gold was trading at US$1,242.80 per ounce, while the Aussie was buying US$0.849.  

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Downer offloads Century Drilling
Downer EDI has announced the sale of the company’s remaining 49% of MB Century Drilling, an oil, gas and geothermal drilling business, to Mohamed Al Barwani Holding Company LLC. The company said that cash inflows would be around $88 million, however there would be a pre-tax gain of only around $5 million once repayments and impairments had been factored in.

At noon, Downer shares were trading down 14c to $3.60.

Ausenco writes down $6.8m
Ausenco, whose share price continues to hover around all-time lows, this morning confirmed it would take a $6.8 million impairment charge on the goodwill of the company’s Energy business. However, Ausenco said the impairment would affect neither cash flow, or its compliance with debt covenants.

Half way through the day, Ausenco shares were trading down 10.5c at $1.855.

Qantas passenger numbers up 5.6% in May
Across the Qantas Airways group May passenger numbers climbed by 5.6% from the previous May, however revenue seat factor, a key measure of profitability for an airline, fell 2.7% to 75%. However for the financial year to date at the end of May, revenue seat factor came in at 80.7%, 1.2% higher than in the previous year.

At midday, Qantas shares were trading down 4c to $2.19.

Rio lifts stake in Ivanhoe Mines to 29%
Rio Tinto has said it would increase its stake in Ivanhoe Mines to 29.6% through the exercise of all its Series A warrants. This represents a 7.3% hike in ownership of the company by Rio Tinto, and is set to cost the miner US$393 million.

At midday, Rio Tinto shares were trading down $1.99 to $66.43.

Downer EDI Limited (DOW) has announced the sale of the company’s remaining 49% of MB Century Drilling, an oil, gas and geothermal drilling business, to Mohamed Al Barwani Holding Company LLC. The company said that cash inflows would be around $88 million, however there would be a pre-tax gain of only around $5 million once repayments and impairments had been factored in.

Managing Director and CEO, Geoff Knox said Downer was happy to complete the sale and the repayment of related shareholder loans.

”The initial 51% of MB Century was sold to MB Holding in 2007, along with a call option over the remaining 49%,” Mr Knox said.

The announcenement comes just days after the company defended its financial position after reports it had halted supplier payments to preserve cashflow.

At 1106 AEST, Downer shares were trading down 10c to $3.64.

Ausenco Limited (AAX), whose share price continues to hover around all-time lows, this morning confirmed it would take a $6.8 million impairment charge on the goodwill of the company’s Energy business. However, Ausenco said the impairment would affect neither cash flow, or its compliance with debt covenants.

Despite the writedown, representing around 5% of the value of the goodwill assets associated with businesses that were acquired in 2008, CEO, Zimi Meka, stood by the company’s diversification into the energy business.

This is despite delays in emission trading in both Australia and the United States.

“Despite these delays, we have confidence in our business model and the medium term growth plans for this area of our business. Our strategic and operational goals remain unchanged,” Mr Meka said.

“We are confident the Group’s energy experience and strong track record for innovative engineering solutions provide a solid base for leverage and market growth in the power, alternative energy and renewable energy markets.”

At 1038 AEST, Ausenco shares were trading down 9.5c at $1.855.

Iron Road Limited (IRD) said that reported iron ore resources at its Central Eyre Iron Project in South Australia were triple previous estimates, with the new figure coming in around 328 million tonnes. Not to rest on their laurels, the board have said they aimed to increase the mineral resource to 500 million tonnes, on the back of a significant programme of drilling, structural, geotechnical, geophysical and metallurgical investigations.

Troy Resources NL (TRY) said that recent surface exploration has identified a new outcropping vein, known as Casposo Norte, located about 4km north of the mill at the Casposo Project in San Juan Province, Argentina. Troy CEO Paul Benson said he was excited about grades of 7g/t gold at surface and within 4kms of a processing plant and would continue to explore the area.

PanAust Limited (PNA) has announced a 17% increase to its Ore Reserve and Mineral Resource estimates for the company’s Phu Kham Copper and Gold Operation in Laos. The miner said that at the current design ore processing rate of 12 million tonnes per annum,, this would extend the mine life by over two years to 14 years.

Across the Qantas Airways Limited (QAN) group May passenger numbers climbed by 5.6% from the previous May, however revenue seat factor, a key measure of profitability for an airline, fell 2.7% to 75%. However for the financial year to date at the end of May, revenue seat factor came in at 80.7%, 1.2% higher than in the previous year.

Qantas noted that increased competition continued in the low-fare aviation market, however Jetstar International and Jetstar Asia were the only two businesses in the airline’s portfolio to lift its revenue seat factor.

Those two businesses carried nearly twice as many passengers as the previous corresponding period, however still carry only around 15% the number of passengers of the flagship carrier, Qantas.

Despite this, the airline said the premium market, including the business travel market, continued to improve “demonstrating the positive effect of the portfolio strategy.”

Qantas said it had hedged 50% of its fuel requirement in 2010/11 at a worst-case crude oil price of US$90 per barrel including option premium.

”At current rates, Qantas has 84 percent participation in falling oil prices for the year.”

At 1017 AEST, Qantas shares were trading down 4c to $2.19.

Rio Tinto Limited (RIO) has said it would increase its stake in Ivanhoe Mines to 29.6% through the exercise of all its Series A warrants. This represents a 7.3% hike in ownership of the company by Rio Tinto, and is set to cost the miner US$393 million.

Chief executive, Andrew Harding, Copper for Rio Tinto said the money would allow Ivanhoe Mines to continue the development of the Oyu Tolgoi copper and gold project in Mongolia.

”Our further investment in Ivanhoe Mines underlines our confidence in the quality of the world class Oyu Tolgoi deposit and its priority in our project portfolio,” Mr Harding said.

Mr Harding said production was expected to commence in 2013, with a five-year ramp up to full production.

Rio Tinto noted it has the potential to exercise more warrants, which, if exercised, would take its interest in Ivanhoe to around 44%.

At the close Tuesday, Rio Tinto shares were trading at $68.42.

RBS – Round Up 300610

Shares tumbled in the US overnight as investors sold out of equities on an increasingly pessimistic outlook over the strength of the global economic recovery. The latest sell-off was prompted by a slump in US consumer confidence and a slowdown in Chinese exports.

The Conference Board ‘Consumer Confidence Index’ slumped to 52.9 from 62.7, against expectations of a fall to 62.

Another measure of volatility, the VIX, jumped 18% to levels seen in late May and early June.

Investors moved their money to the US government’s 10 year bonds, with yields there falling below 3% for the first time since April 2009.

The Dow Jones fell 268.22 points, or 2.65%, to 9,870.30, the S&P 500 sank 33.33 points, or 3.10%, to 1,041.24 and the NASDAQ lost 85.47 points, or 3.85%, to 2,135.18.

Among the banks, Citigroup retreated 5.3%, while Bank of America, American Express, Morgan Stanley and Wells Fargo all retreated between 4% and 5%.

Apple tumbled 4.5% among tech stocks, while rival Microsoft was 4.1% weaker.

Search engines Google and Yahoo! were down 3.8% and 4.7% respectively.

Bookseller Barnes & Noble tumbled 19.1% after posting a bigger than expected loss.

Elsewhere Tesla Motors, a maker of electric cars, traded for the first time on NASDAQ Tuesday. Its shares surged 40.5%.

Ford shares sank 5.3%.

Meanwhile, the bellweather industrial stocks on the Dow index, Boeing and Caterpillar tumbled 6.3% and 5.5% respectively.

NYMEX light crude oil for August delivery fell $2.70 to $75.56 a barrel.

COMEX gold for August delivery gained $4.40 to $1,243 an ounce.

European Markets

European stocks all tumbled on concerns Chinese economic growth was cooling. Losses were heavily felt in commodity stocks, with the major miners all tumbling.

The UK benchmark FTSE 100 lost 157.46, or 3.10% to. 4,914.22. The German DAX gave up 205.19, or 3.33% to 5,952.03, the French CAC40 slumped 143.46, or 4.01% to 3,432.99.

UK banks, Barclays, Royal Bank of Scotland and Lloyds were down 6.3%, 3.9% and 2.9% respectively.

On the continent, BNP Paribas slumped 6.9%, while Deutsche Bank was 3.9% down.

Across other industries, Vodafone shed 2.6% after Credit Suisse cut its outlook for the company to ‘neutral’.

Aussie peers, Rio Tinto and BHP Billiton tumbled 6.4% and 5.8% respectively. Anglo American was 5.6% lower.

BP was 1.7% lower, as it seeks to raise funds to shore up its balance sheet. Royal Dutch Shell was 3.5% lower.

Japanese Markets

Japanese stocks fell for the sixth successive day Tuesday, despite a solid gain in morning trading. As with other international markets, the decline was triggered by concerns over a decline in Chinese economic output, while a stronger yen also hit exporters.

The Nikkei 225 shed 123.27, or 1.27% to 9,570.67.

Among the banks, Mizuho Financial Group, the most heavily traded stock on the Japanese exchange, retreated 1.3%, while rival bank Mitsubishi UFJ lost 1%.

Heavy equipment maker, Hitachi Construction Machinery, shed 2.2%. Investors sold out of that stock as it exports heavily to China.

Canon shed 2.7% and Toshiba Corp fell 1.7%, while Sony edged 0.2% above the line.

Car makers Honda and Nissan gave up 1.9% and 1.3%. Toyota gave 0.6%.

Hong Kong Markets

The Hang Seng lost ground, once again on concerns over Chinese economic strength.

The Hang Seng fell 477.78, or 2.31% to 20,248.90.

Among the banks, heavyweight lender ICBC was 2.6% below the line, while Bank of China was down 2.5%. HSBC was off 2.1%.

Li & Fung, which makes clothes for Australia’s Bonds and Wal-Mart in the US, slumped 4.7%. Footwear maker Yue Yuen Holdings was flat.

As in other parts of the world, commodity stocks were particularly heavily sold. Jiangxi Copper and Yanzhou Coal Mining were down 3.3% and 6.1% respectively.

Cnooc was 3.6% lower, while Petrochina was 2% weaker.

The Aussie market reversed morning gains, tumbling through the afternoon to close down 0.9%. The miners lost ground, however it was the energy sector and consumer staples stocks where losses were greatest.

With only one day to go before the new financial year, the ASX/200 is 10% higher than its close at the end of the last financial year.

At the close, the All Ords slumped 39.1 to 4,370.6, while the ASX/200 retreated 38.8 to 4,345.7. Around 1.8 billion shares worth around $4.4 billion had changed hands.

BHP Billiton and Rio Tinto lost 1% and 0.3% respectively. RBS this morning speculated that Rio shareholders might vote against the proposed merger of iron ore operations with BHP in the Pilbara region.

Fortescue retreated 11c to $4.31.

Newcrest and Lihir were down 1.8% and 2% respectively to $35.29 and $4.32.

Steel stocks, Bluescope and Onesteel edged between 0.5% and 1.3% lower, while Nufarm was upgraded to Neutral by Credit Suisse, sending that company’s shares 23c higher to $5.43.

The broader Materials and Resources sector fell 1%.

The Banks and Financials sector retreated 0.8%. Among the major banks, Westpac reversed morning gains to close down 26c to $21.25, while ANZ sank 42c to $21.87.

Investment bank Macquarie shed 2.2%, extending its worst five-day loss in over 15 months. The banks have been hit by deteriorating business conditions and the loss of key staff.

AMP and QBE were 1.1% and 0.9% lower, joined below the line by Suncorp-Metway, which lost 3c to $8.04.

Property Trusts traded in the opposite direction to the broader market, moving to a 1% gain for the day, led by Westfield, which surged 15c to $12.45.

Goodman Group was up 2c to 64c.

A 71c decline in the price of Woodside shares to $42.57 led the Energy sector to a 1.2% retreat. Santos slid 7c to $12.59.

Linc Energy was down 1.9% despite saying it is experiencing success in the development of a hydrogen fuel cell.

Downer EDI tumbled 25c, or 6.3% to $3.74 after responding to media reports, saying the company had ample liquidity with in excess of $600 million in available funds.

The Industrials sector eased 1.1% lower.

Leighton - the sectors biggest company – lost 1.6% to $29.51, while airliner Qantas dipped 7c, or 3% to $2.23.

Campbell Brothers rallied 4.8% to $30.71 after forecasting a record half-year profit.  

The Consumer Staples and Discretionary sectors were 1.1% and 0.5% softer.

Newscorp helped media stocks higher with a 1.1% gain to $17.01, while gamer Tatts Group eased just 2c lower to $2.23, despite writing off $165 million, mainly from its UK businesses.

Wesfarmers reversed early gains to close 32c, or 1.1% in the red at $28.8, while Woolworths shed 43c to $27.04. 

Around the region, the Nikkei 225 lost 123.3 to 9,570.7, the Straits times Index gave up 35.6 to 2,834.4 and the NZSE50 retreated 17.3 to 2,991.1. The Hang Seng was down 222.4 to 20,504.3

Spot gold was trading at US$1,238.47 per ounce, while the Aussie was buying US$0.8632.