Rival Rio Tinto slipped 2.32 per cent to $70.18.

13 December 2009 | 04:01 Code : 19706 Geoscience events
The major miners sealed a binding $US116 billion ($A126.7 billion) iron ore joint....

The major miners sealed a binding $US116 billion ($A126.7 billion) iron ore joint venture agreement last weekend, leading China’s iron and steel industry to ready itself for domestic mergers and acquisitions to increase its bargaining power in the wake of the deal. Fellow iron ore miner Fortescue Metals inched down 0.47 per cent to $4.27. Felix Resources added 0.36 per cent to $16.91 for the week, after its $3.54 billion tie-up with Chinese company Yanzhou Coal Mining Company crossed the final regulatory hurdle, with the China Securities Regulatory Commission giving its approval for the deal. The company has since completed the deal. The big banks were mostly lower for the week, with ANZ Banking Group giving up 3.1 per cent to $21.30 and Commonwealth Bank of Australia weakening 2.7 per cent to $52.50, while National Australia Bank inched up 0.4 per cent for the week to $28.21. Westpac Banking Corp slipped two per cent for the week to $23.56, amid criticism from Prime Minister Kevin Rudd for its promotional video to customers that compared home loans to banana smoothies. Investment giant Macquarie Group tumbled 1.2 per cent to $47.89. Gold stocks plunged, after the precious metal slipped for four consecutive days during the week. Lihir Gold lost 8.7 per cent to $3.23 for the week, while Newcrest dropped 8.56 per cent to $35.02. Energy shares took heavy losses, as the price of oil fell. Woodside Petroleum ticked down 3.91 per cent to $47.18, Santos gave up 7.72 per cent to $13.75 and Oil Search plunged 9.8 per cent to $5.43. In retail shares, David Jones fell 1.96 per cent to $5.50, while Myer gained 0.52 per cent to $3.83, after data showed consumer sentiment fell 3.8 per cent in December, showing surprising resilience following the Reserve Bank of Australia’s rate rise earlier in the month. Elsewhere in retail, Harvey Norman slipped 2.32 per cent to $4.20, JB HiFi inched up 0.39 per cent to $23, Woolworths plunged 3.49 per cent to $26.83, while rival Wesfarmers, owner of the Coles supermarket chain, rose 1.49 per cent for the week to $29.23. The battle for Australia’s hardware retail market heated up during the week, as Metcash bought a 50.1 per cent stake in hardware chain Mitre 10 for $55 million, seeing off a rival bid from alternative suitor Anchorage Capital. Metcash shares fell 1.58 per cent for the week, to sit at $4.35. Transurban shares rose 1.82 per cent to $5.58 after the Future Fund confirmed preliminary talks with the Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan to support their $6.77 billion bid to take over the toll road operator. In economic news this week, Australia reported a seasonally adjusted current account deficit of $16.183 billion in the September quarter from a revised deficit of $13.133 billion in the June quarter, according to statistics from the Australian Bureau of Statistics (ABS). The unemployment rate fell to 5.7 per cent from 5.8 per cent in November, despite two months of strong gains in employment leading economists towards a pause in the latest batch of data. "With job ads and business hiring plans all pointing up it looks like we have now seen the peak in unemployment.," Mr Oliver said. The jobless figures add to the case for another rate increase from the Reserve Bank of Australia (RBA), as do this week’s latest figures on consumer inflation expectations. According to the latest Melbourne Institute Survey, inflation expectations among consumers edged up to 3.6 per cent in December, up from 3.2 per cent in November. Elsewhere, Business confidence edged even higher in November after making strong gains in the previous month, according to a leading survey. National Australia Bank Ltd’s monthly business survey showed confidence increased two points to +19 – its highest reading since May 2002 – while business conditions dipped two points to +10, after surging nine points in October. Mr Oliver said there were several reasons to suggest that shares are likely to rise in the weeks ahead. "First, the fact that they have just ranged sideways over the last two months without a sharp fall suggests there is underlying buying support for shares." "Second, December and January are normally strong months for shares with the so-called "Santa rally" normally kicking off from around mid-December on the back of New Year optimism, the investment of bonuses and at a time of low trading volumes." "Finally, the broad macro backdrop remains favourable with improving economic growth and earnings, still low interest rates and still plenty of cash on the sidelines." Mr Oliver said that the minutes from the RBA’s last Board meeting are likely to leave the impression that more interest rate hikes are on the way, but that the process will be gradual. "September quarter GDP is likely to show growth of just +0.2 per cent in the quarter (or 0.5 per cent over the year) with positive contributions from inventories, public demand and housing being offset by weakness in net exports, consumer spending and business investment." He said it would be dangerous however to read too much into a soft September quarter GDP outcome, as the improvement in business and consumer confidence, business investment plans, housing approvals and public spending all point to strong economic growth in the year ahead.

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