Australia Market Report of October 27: Improvement Not Expected Ahead

Last Week Wall Street slumped 3.59% amid a panic-driven global market rout, on rising fears of a worldwide recession that will slam a wide range of industries.

Australia market gained total over 8% on last Monday and Tuesday but eroded by sell-offs in the rest of the week. Investors were selling the stocks they can sell. Australian shares have ended the week with another day of losses on fears that a possible global recession may hammer earnings for local companies. Analysts foresee a tough week and expect it will not improve until the credit market gets some sustained improvement.

Australian shares opened lower pulled by big banks. Shortly after the open, the benchmark S&P/ASX200 index was down 69 points, or 1.8%, to 3800.4 points.

Today the Australian dollar opened 3.1% weaker after fears of a global recession pushed the currency to a five-year low at the weekend. At 7am, the Australian dollar was trading at $US0.6195/97, down almost two US cents from Friday's close of $US0.6388/94.

Oil prices plunged on Friday despite a hefty cut in production from the Organisation of Petroleum Exporting Countries (OPEC) as global recession fears heightened concerns about declining energy demand. New York's main contract, light sweet crude for December delivery, tumbled to $US64.15 a barrel, down $US3.69 from its close on Sunday.

Key Economic Facts and Figures

The Federal Government has moved to reassure Australians with investments tied up in managed funds that their money is safe, despite billions of dollars in assets having been frozen. Fund managers will meet the Federal Government in Canberra today to find a way to end the problems since the introduction of the bank deposit guarantee scheme a fortnight ago.

Prime Minister Kevin Rudd said the Government's bank deposit scheme will continue to be worked through over a "long period of time".

The Reserve Bank of Australia intervened to support the Australian dollar in Europe on Friday, a central bank spokesman said today. The Aussie dollar plunged to a five-year low of US60.57c in offshore trade on Friday.

The Housing Industry Association releases its HIA-Austral Bricks trades report for the September quarter.

M&A News

Health insurer NIB Holdings(ASX:NHF) says it has rejected an unsolicited offer that valued the company at up to A$621.44 million. NIB said the third party's valuation of A$1.15 to A$1.20 per share undervalued it, given its robust growth prospects in Australian private health insurance.

BG Group's(LON:BG) A$5.3 billion bid for Queensland Gas Company(ASX:QGC) could be unveiled today if the Foreign Investment Review Board gives an early nod to the deal. BG is looking to buy its coal seam gas partner QGC for around A$5.80 a share. BG is also expected to buy some of AGL's(ASX:AGK) 24.9% stake in QGC.

Prime Media Group(ASX:PRT) has offered about A$8.5 million to buy out the US cinema operator Broadcast Production Services(ASX:BKR), formerly known as Becker Group. Prime already owns 76 per cent of the renamed Broadcast Production Services.

Important Corporate News

James Packer is expected to end his family's half-century association with the Nine television network by stepping down from the board of its parent company PBL Media. His Consolidated Media(ASX:CMJ) no longer has any board representatives on the Boards of the PBL Media group.

Building materials group Boral(ASX:BLD) expects annual profit to dip 17.7% in 2008/09, as housing construction markets in Australia and the US slow as the global financial crisis continues to impacts. The company said Boral expected profit after tax to be around A$200 million this financial year, down from A$243 million for the previous year.

Goodman Group(ASX:GMG) is expected to announce a capital raising of more than A$700 million, despite the beating suffered by the listed property sector last week. Goodman had forecast earnings growth of 6 percent in 2008-9, but the reduced guideline tomorrow will be more in line with analysts' forecasts.

Top 10 ASX on Turnover - Mid Market (AESTD 12:50)
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Code     % Change   Volume  Turnover      Low  High
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ASX:BHP  +2.5   6,275,097   $154,439,791  2400 2535
ASX:CBA  -2.88  1,733,551   $70,515,677   3901 4088
ASX:WDC  +7.34  4,829,274   $67,567,647   1311 1450
ASX:WBC  -1.69  2,985,212   $60,482,571   1995 2062
ASX:NAB  -3.03  2,442,751   $58,393,501   2360 2428
ASX:RIO  +2.63  853,100     $55,782,176   6300 6742
ASX:WOW  +.53   2,100,307   $55,219,808   2580 2628
ASX:ANZ  -2.67  2,721,970   $46,880,851   1689 1759
ASX:TLS  -.49   11,659,219  $46,583,199   396  402
ASX:GPT  -37.82 58,528,919  $40,532,149   62   74.5
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Contact:
Michelle Liang
Asia Business News Asia Bureau
Tel: +61-2-9247-4344
Email: michelle.Liang@abnnewswire.net
 


Source:
ABN http://www.ABNnewswire.net

Copyright (C) 2008 ABN Newswire. All rights reserved.

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