Refreshed after yesterday?s holiday, Australian markets started Tuesday trade with a rally. The flow of good news for miners boosted the ASX 200, but almost all of the opening gains were lost by the end of the day as rising bond yields weighed on stocks. The Australian dollar was a little depressed after pessimistic results of the Manpower Survey printed, but regained its stance and remained largely unchanged since yesterday.
Headlines
Australian Stocks Advance, led by BHP as Commodities Rebound - Australian stocks broke the four-day decline. BHP Billiton, world?s largest mining company was leading the move, as its revenues gained on rising prices for iron ore.
Source: Bloomberg
RBA may apply brake as jobs, growth data test speed limits - The Australian and world economies keep on growing at unprecedented rates, which do not appear to be sustainable. Reserve Bank of Australia is expected to raise rates in the next month if the economic indicators continue to print as strong as they did last month. Around the world, bond markets are heading the same direction, with Fed and European Central Bank raising their rates last week and Bank of England expected to do the same soon. Source: The Australian
http://www.theaustralian.news.com.au/story/0,20867,21882701-20142,00.html
Rio ponders 50% Pilbara expansion - Australian iron ore giant Rio Tinto announced expansion of their Pilbara operations, targeting a 220 million tonnes a year output by 2009. Source: The Australian.
http://www.theaustralian.news.com.au/story/0,20867,21888451-5005200,00.html
Flood insurance bill hits $200m - Displaced citizens return to their homes after Friday?s storm. Over 15,000 insurance claims with an estimated cost of $200 million were filed. The flood caused destruction on the Central Coast, Hunter region and pats of Sydney. Source: Herald Sun.
http://www.news.com.au/heraldsun/story/0,21985,21892004-5012062,00.html
Currency
The Australian Dollar stayed strong during the Asian session and saw no major shocks. The only negative pressure was received from the labor market. The unprecedented growth seen last month is expected to slow down significantly. The manpower survey printed 25% growth compared to the previous reading of 31%. However, increased business confidence of 15 as opposed to the previous 13 had its final say and the Aussie strengthened, regaining the momentum and trading around 0.8440.
Stock Market
Shortly after ASX reopened, it surged to 6294.9, but then slowly retraced to 6240.1. China?s demand for iron ore boosted the prices for the commodity and the profits of BHP Billiton, word?s largest mining company. An ambitious goal of another Australian mining giant Rio Tinto to expand their production in one of the largest mining fields by 50% added to the boost of Australian mining industry, the backbone of country?s economy. However, rising bond yields and public?s doubt into sustainability of the present growth pace has provided a negative pressure and the stocks have been sliding down for the rest of the day.
Bond Market
The 10-yr yield remains strong, gaining slightly against yesterday. The 10-yr yield opened at 6.22 and closed at 6.42 gaining 20 basis points. The Australian called the rise in the bonds yields as natural break on Australia?s strong recent growth.