Australian Markets Update - Weekly Wrap

Provided by The Australian Investor

Saturday 14th July 2001

Announcements and data this week confirm we're putting the past behind us and moving forward more confidently. It may even be that the introduction of the GST brought forward the painful restructuring that the slowdown afflicting economies around the world would be forcing us to do right now.

The unemployment rate, the worst date released this week, was steady, better than economists' forecasts, although that doesn't mean they're wrong in their belief there is more bad news to come on that front before we're out of the woods.

Good news from American tech and telco giants like Microsoft and Motorola suggests a strengthening in the world's economic engine, and local news from Woolworths and others suggests the worst might already be well and truly be factored into prices here.

On Monday the ANZ Bank released the results of its survey of job advertisements in metropolitan newspapers. In June, those ads fell 1.7 per cent, and the fall in New South Wales was 4.8 per cent.

Woolworths gave the best news of the day, reporting sales in the 52 weeks to the 24th of June had risen 10.1 per cent to $20.915 billion. Woolworths ended the week up 47c at $10.68.

WMC Ltd said it will have to write off around $78 million against this year's profit after tax. Its shares ended the week down 3c at $9.42.

Mosaic Oil announced the discovery of its third gas field near Surat, and rose 2c to 17.5c over the week.

Monday also saw speculation about a National bank takeover of Britain's Abbey National get another run, and news later in the week that UK regulatory authorities had forced competitor Lloyds to step back from the prize heightened the interest. NAB ended the week up 85c at $32.55.

On Tuesday , the NAB's survey of Australian employers revealed that business conditions are at their strongest level in nearly a year, with strong improvements in profitability and employment. The bank interpreted these results as indicating a very strong economic recovery over the next year.

Seven Network announced its deal to take an interest in troubled magazine publisher PMP. Seven's shares fell 20.8c over the week to $7.562 and PMP's climbed 19c to 62c.

If it maintains the momentum of the last year, engineering business Clough could end up dominating oil and gas development around the world. On Tuesday, it announced another contract, this time in India, and ended the week down 2c at 94c.

Tempo Services made a purchase that should make it the nation's largest commercial cleaning and building services provider, with total annual revenues from all operations expected to top $580 million. It closed the week up 12c at $2.39.

On Wednesday , the Bureau of Statistics reported that housing finance in May leaped a big but not surprising 9.8 percent. Other good economic news came from the Westpac-Melbourne Institute which reported that its index of consumer sentiment rose to 109.2 points in July, from 108.4 in June, consolidating the strong 14.8 per cent rise recorded in June.

John Fairfax advised its annual results would be broadly in line with forecasts, and closed the week down 11.4c at $4.25.

Leighton Holdings had plenty to brag about, with wins in the Philippines Expressway competition and the QAL Calciner contract. It closed the week up 66c at $9.21.

On Wednesday in the US, the Chicago Fed Manufacturing Index hit 155.5, a fall of 0.2 per cent in May to 155.5 and its eighth monthly fall in a row.

Thursday , the Bureau of Statistics announced that the unemployment rate for June was steady with May's 6.9 percent, though economists still expect things to get worse before they get better. The Westpac Melbourne Institute advised that consumers' expectations of inflation had risen slightly, indicating that good news about the economy is not being ignored.

Wesfarmers amended its bid for Howard Smith. Wesfarmers gained 10c over the week to $27.10 and Howard Smith's bounced around a bit but closed this week at $13.35, the same as last week's closing price.

Mayne Nickless also amended its current takeover, adding a cash component, and by the end of the week its shares were up 15c at $6.40 and FH Faulding's were up $2.05 at $14.50.

Hutchison's parent Hutchison Whampoa formed an alliance with Motorola to deliver 3G wireless devices, and Hutchison shares ended the week up 1.5c at 35c.

Goodman Fielder advised it will meet its revised profit forecast, sending its shares up 8c for the week to $1.17.

Shareholders in James Hardie were given good news at their meeting, with sales in the US up 25 percent, and its shares ended the week up 13c at $5.67.

In the US, same store retail sales figures were mixed but there were few surprises on the downside. Weekly initial unemployment claims rose 42,000 to 445,000, a surprise to many but others believe it is the result of a regular annual process of layoffs in vehicle manufacturing while factories are retooled for new models. As the layoffs do not occur at a set time each year, seasonal adjustment cannot smooth out their effect. Import prices dropped 0.5 percent, and non-fuel prices fell 0.4 percent.

On Friday , Telstra announced it couldn't' find the perfect buyer for its NDC division, and that it appeared it would meet its earlier forecasts. It closed up 21c at $5.26.

Westpac decided to invest in stockbroker Hartley Poynton - HP JDV Ltd - in what could be the first serious shot in a vigorous consolidation of the online and real-world stockbroking industry. The Bank ended the week up 37c at $13.75 and the broker ended up 5c at $1.42.

Australian Infrastructure reported a loss, and ended the week down 3c at $1.73.

The US was awash with data on Friday. June retail sales rose 0.2 percent, weaker than the market expected, and if motor vehicles were excluded, the result was a fall of 0.2 percent. However, the slip is seen as concentrated in food and petrol, the prices of which have risen, so the movement does not indicate any underlying trend.

The June Producer Price Index slid 0.4 percent, a larger fall than the market hoped to see, but the core rate, excluding food and energy, rose 0.1 percent, in line with forecasts. Falling energy prices took credit for the fall in the headline rate.

The University of Michigan published the results of its survey of consumer confidence for July, showing a rise of 1.1 points to 93.7, so American business can still rely on strong consumer demand.

- Aussie Dollar

The Aussie dollar lost more than half a US cent over the week - from last Friday's 51.15 US cents it reached 50.58 US cents by 4.00 pm yesterday.

- SPI

The September contract finished the week at 3,400, gaining 45 points.

- Industrials

The S&P/ASX 200 Industrials index dropped 77.6 for the week to 5,821.1.

- Resources

The S&P/ASX Resources index gained 3.2 points over the week to close at 1,565.8.

- Banks

The Bank Index closed the week up 126.9 points at 8,835.5

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