The Australian economy will record a more robust recovery than other nations, the Organisation for Economic Cooperation and Development has said in Paris.
The organisation’s semi-annual economic outlook has said the country’s recovery will proceed as expected, and that other countries will fall behind in terms of economic performance.
“Australia is likely to experience a relatively more robust recovery,” the report stated. “Current economic trends and the reduction in negative macroeconomic risks argue in favour of a gradual tightening of monetary policy.”
“Furthermore, the planned reduction of the Federal budgetary stimulus seems to be an appropriate response to the needs of the economy.”
Federal treasurer Wayne Swan said the OECD report showed Australia is continuing to perform better than a number of other countries emerging from the global financial crisis.
“Stimulus, both fiscal and monetary, has meant Australia has avoided the permanent skills and capital destruction that generally accompanies deep downturns and has meant less permanent damage to our economy,” Swan said in a statement.
“While Australia has come through the worst of the global recession in a stronger position than other advanced economies, we know that the job is far from finished and the challenges ahead will be just as difficult as those just passed.”
Shares open lower after poor economic data in the US
The Australian sharemarket has opened nearly 2% lower today after poor results on Wall Street, where worse-than-expected results from a variety of economic monitors dampened investors’ spirits.
The benchmark S&P/ASX200 index was down 62.2 points or 1.31% to 4687 at 12.00 AEST, while the Australian dollar also opened lower at US91c.
ANZ shares dropped 2% to $21.80, while Commonwealth Bank shares also fell 1.5% to $52.28. Westpac lost 1.9% to $24.20, as NAB lost 1.3% to $28.55.
Sims Metals Management is about to raise $475 million in new equity through an institutional placement and share purchase plan.
“Looking to the future, through the capital raising, the company will be in an enviable position to strengthen its existing business and fund acquisition growth opportunities, which will enhance and expand its industry leading position,” Sims group chief executive Dan Dienst said in a statement.
The placement will be priced at $21 per share, while eligible shareholders will be permitted to purchase up to $15,000 worth of new shares.
“Cash balances will also be available to fund working capital should the company’s markets rebound strongly,” Dienst said.
Meanwhile, Woodside Petroleum has said the cost of its $11.2 billion liquefied natural gas project in WA will likely rise by 10% due to the slower pace of construction work.
The company, the country’s second-largest product of oil and gas, said the Pluto project could grow in cost by six to 10%, up to $1.12 billion, above the initial estimate.
But if the project remains on schedule, the Pluto project is set to become the fastest developed liquefied natural gas project in Australia, after its discovery in 2005.
ANZ sells Custodian Services to JP Morgan
ANZ has said it will sell its Custodian Services business to US banking group JP Morgan, as it continues to move its focus towards the Asia-Pacific region.
“Custodian Services is increasingly a global scale business and JP Morgan Worldwide Securities Services is ideally placed to service this portfolio of clients with its comprehensive suite of custody and securities products and solutions,” ANZ institutional managing director Shayne Elliott said in a statement.
“This transaction continues the process of refocusing ANZ’s Institutional business on our core banking priorities in Australia, New Zealand and Asia.”
The completion of the sale is expected before 31 December, but is subject to regulatory approval.
The Bank of Queensland has said it intends to spend part of the $340 million capital raised during August on expanding parts of its retail business, according to a report in The Australian.
“We are not interested in increasing our risk by getting into corporate lending,” chief financial officer Ram Kangatharan said. Instead, the bank is expected to look at mortgage portfolios and financing companies to integrate into its business.
Overseas, US stocks have continued to fall due to a new batch of economic data that delivered worse-than-expected results, causing investors to fear about the state of the economy.
The Conference Board’s index of US leading economic indicators rose 0.3% to 103.8, but was still below Wall Street’s 0.5% expectations. Additionally, it was revealed that one in seven US mortgages are in foreclosure, or at least one payment was past due in the third quarter.
The benchmark S&P500 index recorded its worst one-day percentage fall in three weeks, falling 14.9 points or 1.34% to 1094.9, while the Dow Jones Industrial Average fell 93.87 points or 0.9% to 10,332.44.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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