Stocks slightly lower

The Australian share market closed slightly lower today despite making earlier gains, and a good lead from Wall Street.

The benchmark S&P/ASX200 index was down 6.4 points, or 0.12%, at 5371.7, while the broader All Ordinaries lost 3.3 points, or 0.06%, to 5476.3. CMC markets senior dealer Dominic Vaughan described today’s trading as “ordinary”, considering the good lead from Wall Street in Friday night trading in the US.

  • “Overall, it’s been a very disappointing performance,” he said.
  • “The energy sector’s been a bit of a drag on our market today with the oil price.
  • “When you take that out of it, most of the industrials have had a pretty ordinary performance.
  • “The same with our banking sector. It still remains very much under pressure. Australian investors still remain very wary.”

Nevertheless, global investment firm Babcock & Brown held its ground today as it met a syndicate of its bankers that are considering whether to enforce a review of the group’s $2.8 billion syndicated-debt facility. Shares in Babcock & Brown were steady at $5.25.

“I don’t think they’re out of the woods yet. In my view it’s a temporary reprieve,” Mr Vaughan said.

Shares in Macquarie Group were 52 cents worse at $48.65.
The banking sector was mostly lower. Westpac lost 20 cents to $21.70, ANZ shed 25 cents to $19.40 and NAB dropped 73 cents to $27.55. Commonwealth found 8 cents to $41.84. The big diversified miners were stronger. BHP Billiton gained 57 cents to $43.61, while its takeover target Rio Tinto rose $1.70 to $136.20.

At a speech in Sydney, Rio Tinto boss Tom Albanese said direct investment by foreigners in Australia was needed to unlock the full potential of the country’s resource assets. Oil prices fell on a report that Saudi Arabia may increase production to prevent the price of crude surging higher than record peaks near $US140 a barrel.

Woodside fell $1.73 to $61.27, Santos lost 82 cents to $21.18 and Oil Search dipped 8 cents to $6.10.
“If you see extra supplies being pushed back out into the market, you’ll probably see these oil prices come off and the you’ll start to see the speculative money start to unwind some of these stocks,” Mr Vaughan said. Elsewhere in the resources sector, Roc Oil launched a $612 million takeover offer for Anzon Australia, which was rejected by the target’s board.

Shares in Roc dropped 23 cents, or 11.39%, to $1.79, while Anzon’s shares were 8.5 cents, or 6.51%, higher at $1.39. At 4.23pm, the spot price of gold in Sydney was $US870.70, down 10 US cents on Friday’s close of $US870.80.

Newcrest Mining fell 50 cents to $26.27, Newmont was down 1 cent $4.94 and Lihir Gold lost 4 cents to $2.87. Making headlines today, agribusiness company Timbercorp said it expected new sales from horticulture projects of $76 million for the period from October 1, 2007 to June 15, 2008. Its shares closed 5.5 cents, or 5.82%, lower at 89 cents.

Also, diagnostics group Sonic Healthcare has made its second acquisition in Germany this month, agreeing to buy 100% of Hamburg-based GLP Medical Group. Shares in Sonic were steady at $14.40.

US stocks closed higher on Friday, helped by a government report that showed underlying price pressures rose moderately in May, easing fears that inflation would force a near-term rise in interest rates. The Dow Jones industrial average was up 165.77 points, or 1.37%, at 12,307.35.

Retail stocks were mostly lower, as Woolworths lost 30 cents to $26.35 and Coles owner Wesfarmers dropped 10 cents to $38.67. Media stocks were mixed. News Corp was 28 cents higher at $19.48 and its non voting shares were 34 cents higher at $19.00, but Fairfax was 13 cents weaker at $2.88.

The top traded stock by volume was Empire Oil & Gas with 200.5 million shares worth $5.7 million changing hands. Its shares dropped 0.5 cents to 2.4 cents. Preliminary market turnover was 1.62 billion shares worth $4.84 billion, with 535 stocks rising, 726 falling and 349 unchanged.

The June share price index futures contract improved 4 points to 5372 on a volume of 58,956 contracts.

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