egolinews.com

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.  

---

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.

Filed under:
Market Watch by egoli