The Australian markets were shaken by mixed economic releases and equities suffered from profit taking. The nation is taking on more debt and the number of bankruptcies rose to new unprecedented highs. However, the Aussie remained steady throughout the day, while both the equities and bond yields decreased.
[B]Bankruptcies on the rise, figures show[/B] - According to a release by a government agency, the Insolvency and Trustee Service Australia (ITSA), the number of bankruptcies in Australia is growing rapidly due to the easy access to credit and high cost of living. The Australians appeared to be lost in the economic boom, according to the data. Nationwide, the number of bankruptcies grew 13.2% to 25,242. NSW region with 23.39% increase registered the highest increase in 20 years. Policymakers are concerned about rising debt that might have negative impact on the health of economy in the long run. [I]Source: Herald Sun[/I]
[B]Zinifex surges on merger rumors[/B] - The shares of a zinc mining giant Zinifex surged today after rumors of a possible merger with a fellow company Oxiana. The comments of Oxiana?s chief executive Owen Hegarty about the possible cooperation and synergies between the two companies have created the buzz. The companies are believed to have discussed a possibility of a merger in the past, but did not confirm their plans to do so. [I]Source: The Australian[/I]
[B]Cheap WA gas pressured[/B] - A large Australian gas manufacturer Santos has secured a contract in Western Australia at nearly four times the price charged for domestic customers. This indicates a breakdown of the low-cost regime maintained by Carpenter?s Government. The domestic gas supplies are expected to be tight for the next six years when the new offshore fields will come into production. The higher gas prices for industry will translate into higher electricity bills for consumers, which remained unchanged for the past decade. The Santos spokesmen said today that the while the few new contracts were small, customers were prepared to pay the market price for the supplies they required. [I]Source: The Australian.[/I]
The Aussie was not affected by today?s economic releases. The Home Loans printed positive 0.1%, but missed the expectation of 0.5% and far below the 2.2% previous data signaling the current concerns about high housing prices. The Investment Lending printed strong at 8.9% versus prior 0.7% and the NAB Business Confidence remains at a two year high at 15 points. However, the Aussie was only moved later in the day by a sudden strengthening of the US dollar.
The news headlines of record bankruptcy levels and in Australia might have caused investors to take profits and send yesterday?s strong mining performers, such as BHP down. The latter dropped by 1.0%, followed by another yesterday?s leader Woolworth?s supermarkets. It was reported to have missed some investors? expectations in its financial release and dropped 3.1%. The zinc giant Zinifex lost 4.1% of its value on rumors of a possible merger with a fellow company Oxiana. The index closed 39.1 points lower at 6361.5.
The 10-yr yield opened lower today, following the US yield and remained little changed throughout the day. The economic releases have spurred a small gradual appreciation of the yield, which closed 1.9 bps lower at 6.277%.