Australian Markets Wrap: Too Nervous to Score

Provided by The Australian Investor

Monday 30th July 2001

After some good days and some bad ones, the markets closed Friday having lost around one fortieth of their value. It was another of those weeks when some good news was greeted with indifference, and much was simply ignored as the mood keeps swinging low. Local data is good, and getting better, and American data seems to be more positive than negative. Local companies are not warning in unusual numbers given the year we've just been through, most are indicating that cost reduction programs are working well, and production from many resource companies is on the rise.

From the previous Friday's close, the S&P/ASX 200 dropped 87.1 to 3,297.1 and the All Ordinaries dropped 82.6 to 3,245.5 over the course of last week.

Monday was the day when the very first Producer Price index was published. The measure, a new indicator of movements in wholesale prices, showed big increases in the prices of imported materials, meat and petroleum, but analysts are reluctant to extrapolate from the data until its worth is established by experience.

Coles Myer appointed new management for its troubled apparel and general merchandise division, and ended the week at $7.64 for the C shares, down 60.4c, and at $6.10 for the DA shares, up 12c.

Ivanhoe advised its had missed its June quarter iron ore targets, and ended steady at $12.00. Murchison announced record tin production at Renison, and ended the week down 15c at $1.12. Selwyn also announced record production, of gold, and ended at 93c, up 3c.

Coffey International warned, and ended down 51c at $2.11. Hunter Hall warned and by the end of the week, had dropped 60c to $1.85.

On Tuesday , the Productivity Commission reported that while telecommunications services in rural Australia are worse than those in towns and cities, the level of service available to rural and remote consumers was no worse than in other comparable countries.

News Corp reported it has agreed to sell Fox Family Worldwide, clearing a problem that has hung over it since Mr Saban served notice on the company. It announced further good news on Thursday - US regulatory authorities have approved its Chris-Craft acquisition. Over the course of the week, it dropped 7.8c to $17.45.

James Hardie announced it will restructure and set up a foreign holding company to reduce the sharpness of the Australian Tax Office's bite. Its shares rose 27c over the course of the week to close at $6.04.

ANZ seems determined to retain its credit card lead, electing to be the first of the big four to introduce smart-card technology to its range of products. Over the week it dropped 36.8c to $15.69.

Atkins Carlyle lifted net profit by 144.5 percent, and ended the week up just 16c at $3.10.

Mosaic Oil reported its Churchill site in the Surat basin looks like it holds a lot more gas than first thought, and its shares rose 5c to 22c by the end of the week.

Peplin lodged more patent applications, and ended the week up 15c at $1.00.

Data Advantage seems to have run out of patience with Baycorp, and put its foot down publicly. Data ended the week up 10c at $6.60 and Baycorp ended up 11c at $9.90.

On Wednesday , the Bureau of Statistics published the June quarter inflation rate, and while it looked bad, at an annualised six percent, once the GST and the effects of our weak currency are removed, the rate was within expectations.

The Australian Industry Group reported its Performance of Manufacturing Index dropped to 46.7 in July, but the three-month trend indicates suggest the worst for the sector may have passed.

Rio Tinto reported increased production across the board, and ended the week down $1.113 at $32.68.

Santos reported steady volumes but stronger revenues in the June quarter, and ended the week up 15c to $6.15.

Pasminco reported its June quarter production and analysts were impressed by the strength of its performance and the success of its cost reduction program, but investors aren't in the mood to forgive, and it ended the week down 8.5c at 13c.

BHP Billiton started its asset reduction program with the reduction of its holding in the Columbus Stainless Steel joint venture, and ended the week down 74c at $9.49.

Carter Holt Harvey reported its first quarter net loss, and ended the week up 2c at $1.42.

On Wednesday in the US, it was reported that existing home sales in June slipped 0.6 percent, a smaller fall than most analysts seem to have been expecting. Longer-term supply of housing stock has been falling, explaining the difference between home sales data and mortgage application data, which has remained strong.

Thursday , the DEWRSB reported that skilled vacancies have fallen again, down 19.6 percent year-on-year, but labour market economists note the series is volatile, and the underlying trend suggests unemployment will not be rising much further, unless the global economy collapses.

Normandy reported another record quarter, and ended the week up 1c at $1.15.

Novus Petroleum reported its second quarter revenues were up, and its shares ended the week up 17.7c at $2.15.

Management of Macquarie Bank shared its positive views on growth prospects with shareholders, but the shares are entering the period when employees can trade, the the company has disappointed by failing to go ahead with the share buy-back the market expected. Its shares ended the week down $3.572 at $35.12.

BT Office Trust reported is net profit for the year was up almost 76.7 percent, and its shares ended the week up 2c at $1.50.

Southcorp announced a joint venture with Robert Mondavi to produce premium and super-premium wines, and over the course of the week it rose 7c to $7.32, although part of that could be reaction to a rumour that Mondavi intends to take over Southcorp or vice versa - a rumour this deal doesn't confirm.

Telstra briefed analysts the outlook for its Chinese joint ventures and ended the week down 16c at $4.85.

On Thursday in the US, the June quarter Costs of Employment Index rose less than expected, at just 0.9 percent but wages and salaries and benefits and costs both rose the full one percent. June durable goods orders declined more than twice expectations, falling two percent, or if transportation orders are excluded, 1.5 percent, and if military hardware orders are also excluded, the decline was 1.7 percent. The best news from US data was that weekly initial unemployment claims dropped 51,000, the biggest drop since March. However, rather than indicating the end of the decline phase for the American economy, it might simply represent the end of retooling shutdowns in the motor vehicle sector.

On Friday , the Bureau of Statistics reported that new vehicle sales were down 4.8 percent in June, more than analysts were forecasting.

MIM's June quarter report was good, with production up, and its shares rose strongly on Friday, and ended the week up 1c at $1.14.

Australand announced good profits at a time when they're scarce, and closed the week down 6c at $1.55.

Newspapers reported that the government had indicated its support to the SingTel bid for Optus, and its share rose 6c over the week to close at $3.54. You could be forgiven for speculating on the date on which Optus's rising price meets Telstra's on its way down.

LookSmart's report suggests it is getting close to cash break even, but it ended the week down 1.5c at 8.4c.

In the US on Friday, official data painted a picture gloomier than expected, with GDP growth for the June quarter just 0.7 percent rather than the expected 0.8 percent. Inventories shrunk slightly quarter-on-quarter, and consumer spending jumped 2.1 percent, but business investment plummeted 13.6 percent, its largest drop sine 1982. The results of the University of Michigan's latest survey of consumer confidence caused concern. Confidence had remained high, supporting spending, but by late July, consumers had become more pessimistic.

- Aussie Dollar

The Aussie dollar dropped almost half a US cent over the week - from last Friday's 51.35 US cents it reached 50.84 US cents by 4.00 pm yesterday.

- SPI

The September contract finished the week at 3,302, down 92 points.

- Industrials

The S&P/ASX 200 Industrials index dropped 144.6 for the week to 5,688.1.

- Resources

The S&P/ASX Resources index dropped 46.3 points over the week to close at 1,461.6.

- Banks

The Bank Index closed the week down 384.1 points at 8,597.8.

- Gold

The Gold Index closed the week up 2.6 points at 801.9.

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