Australian Markets Update - Weekly Wrap

Provided by The Australian Investor

Saturday 23rd June 2001

For most of the week, the market was in the doldrums with only rumours driving any action, but Friday's rally pushed it into positive territory. The S&P/ASX 200 rose 16.1 points or 0.5 per cent over the course of the week to close at 3,428.3. The All Ordinaries hit 3,364.7, up 17.2 points or 0.5 per cent for the week.

On Monday Rio Tinto's Comalco increased its stake in Queensland Aluminium to 38.6 per cent, and the same day it was reported the company had reached an agreement with its Japanese partners in the West Angelas project. Its shares ended down 23c for the week at $32.61.

Baycorp confirmed it is very interested in Data Advantage, and its shares rose 59c to $10.10 for the week and Data's rose 5c to $6.45 over the same period.

On Tuesday, Pasminco attempted to stop the collapse of its share price by talking up its Century Zinc mine, but it took another day or two and a trading halt before they started their strong recovery, ending the week up 1c at 33c.

Hutchison announced it will build an $830 million metropolitan 3G network and confirmed it was comfortable with its profit outlook and its shares rose 7.5c for the week to close at 32.5c.

Tuesday also brought the first major economic data for the week, with the Bureau of Statistics advising that business investment fell for the their quarter in a row, hitting its lowest level in more than five years. Merchandise imports for May were also published that day, and they rose 4.5 per cent with machinery and transport making up much of the increase.

On Tuesday in the US, housing starts data was published, revealing a fall of 0.4 per cent for May but an increase of 1.6 per cent for the twelve months. Building materials companies active in the US weren't hurt, with James Hardie closing the week down 5c at $5.15 and CSR rising 12c to $7.02. On Thursday CSR discussed the future site of its head office, with the US looking like the favourite.

On Wednesday, Air New Zealand chose a stronger relationship with Singapore Airlines, giving Qantas the cold shoulder, and over the week, Qantas shares didn't move from last Friday's close of $3.27 but investors weren't so sure Air New Zealand was getting the best deal, and its shares lost 8c to $1.08.

The Westpac Melbourne Institute published its leading economic indicators, showing a return to growth, though lower than the long-term trend.

Occupational and Medical Innovations won a patent for its safe intravenous injection valve, but ended the week steady at 71c.

Kimberley let the world know it had found another big diamond at Ellendale, and rose 9c for the week to close at 69c.

On Thursday, Village Roadshow announced that it had closed its French operations and will buy out its partner in Greece, and ended the week up 6c at $1.54.

Clarity International's software attracted is first major American licensee, and the company confirmed it is on track to meet profit forecasts, and its shares rose 6c to 41c for the week.

Loyalty software business Catuity advised the market the American version of Target stores will be using smartcards with its software embedded for its customer loyalty program, and its shares jumped, ending the week up $1.00 at $8.80.

The Bureau of Statistics announced that dwelling commencements were down 2.7 per cent in the March quarter, but that was hardly a surprise, and economists expect later data to reveal the impact of falling interest rates and the increased home buyers grant.

The DEWRSB announced that skilled vacancies were down 2.6 per cent in June, but analysts had been predicting a slowing of employment until the end of next quarter, or the end of the year, so the result was disappointing but not surprising.

Burdekin Pacific's 40 per cent-subsidiary ICE Interactive had a busy week, announcing two alliances, one with Pineapplehead and the other with the UK's Digital Creations Media, and its shares closed the week up 0.4c at 2.8c.

On Friday, the Bureau of Statistics published the result of its survey of expectations, and things are still not looking rosy. Businesses are expecting lower prices and profits in the September quarter, and few expect to be hiring.

The US balance if trade for April was a deficit 2.7 per cent smaller than the month before, with demand for imports weakening. The Philadelphia Index of Leading Indicators rose for May, indicating the possibility of an American economic recovery within six to nine months.

Cellnet confirmed it expects its net profit to rise strongly this year, and its shares rose 17c for the week to close at $1.27.

Australian Gas Light revealed the effects on its bottom line of problems with its New Zealand investment Natural Gas Corp, and its shares were down $1.00 to $8.09 for the week, causing a certain degree of astonishment among brokers and analysts.

Profit warnings are still trickling onto the market. Amongst this week's were:
- Noni B, the dress shop, which will stick to its expansion plans and ended the week up 9c at 69c;
- Commsoft, warning of a $17 million loss, and ending the week down 2.3c at 5.5c;
- Open Telecommunications lodged a profit warning, and the market dumped its shares - wrong sector for bed news at the moment - it closed the week down 4.8c at 8.7c;
- Iocom warned of a loss including abnormals of around $11 million and over the week but rose 0.6c to 9.5c.

Some advised of rosey outlooks:
- QPSX increased its profit outlook to more than fifty times forecast, and its shares ended the week up 5c at 49c; and
- Great Southern Plantations advised it will pay the dividend it forecast, and its shares rose 9c to 78c.

Some of the week's most active stocks were driven by rumour not fact:
- Rumours of a takeover battle between Rio and De Beers, and an offer price of $12 drove WMC shares, but the news isn't new and the frenzy cooled - its shares ended up 73c at $9.72;
- Woodside shares also continued to be dogged by long-running rumours of an offer from BHP or a rematch with Shell, but investors seem to have got tired of waiting, and they ended the week down 8c at $15.87.

Aussie Dollar

The Aussie dollar declined three quarters of a cent over the week - from last Friday's 52.36 US cents it reached 51.64 US cents by 4.00 pm yesterday.

SPI

The June SPI200 futures contract finished the week at 3,428, regaining the 21 points it lost the week before.

Industrials

The S&P/ASX 200 Industrials index rose this week, gaining 32.2 points to 5,892.7.

Resources

The S&P/ASX Resources index barely moved from Friday to Friday, rising just 0.3 points for the week to 1,553.2.

Banks

The Bank Index closed the week up 85.5 points or 0.9 per cent at 9225.7.

Gold

The Gold Index closed the week down 3.6 points or 0.4 per cent at 806.5.

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