Economy

News and updates on the Australian economy and world markets that impact on the Australian economy.

Australian Market Wrap #260 - MARTIN LAKOS, MACQUARIE PRIVATE WEALTH

Mortgage One - Thursday, September 29, 2011

The energy sector and the big miners helped the local market higher today, on the back of ongoing rebounds in markets all around the world. Last night the European markets were up between four and five per cent. It does look like policymakers are starting to get it, that they need to be getting some action going.

Tim Geithner, the US Treasury secretary, comments that the European governments are starting to head in the right direction saw markets continue to rally from pretty oversold positions and probably a good portion of that rally is short-covering. The US market was up nearly 320-odd points at one stage, closing up 146 points on the back of slightly disappointing consumer confidence numbers.

The disappointment was Shanghai and Hong Kong markets down about one per cent with concerns that the recent monetary policy tightening in China and credit growth tightening is actually starting to seriously impact property prices and property sale volumes.

In company news, Wesfarmers have sold their Premier Coal mine in Collie, WA for about $296 million, posting a $90 million pre-tax profit. Westfarmers still have two other key coal assets, being Bangla and obviously Curragh, and combined will produce about eight million tonnes of coal. The sale of Premier doesn’t see Westfarmers exiting the industry altogether but it does raise the question why are they selling? It may well be that they're seeing peak prices and they can get a good sale price.

The ACCC have given the green light to SABMiller’s takeover of Foster's as expected. The ACCC made it well known that they did a fairly intensive search, speaking to suppliers, competing breweries, the retail sectors that sells brewing products. They see no change in the competitive environment.

Uranium miner Paladin Energy has come in with a $70 million institutional capital rising. The pricing is being set by a book build based on a - roughly a 10 per cent discount to the previous closing price, which was $1.31. The share price has been in almost a consistent free fall losing almost 80% this year. Paladin has noted the capital raising is to support the balance sheet. They're seeing some cost blowouts in one of their projects, and clearly they're wanting to make sure the balance sheet is in good shape ahead of a maturity of some US converting bonds that take place in March, 2013.





 



 


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