Shares slide as British economy is canned by ratings agency; Coke on target for profit growth: Economy roundup

The Australian sharemarket opened lower today following a poor night on global equity markerts, with ratings agency Standard & Poor’s downgrading its rating outlook for Britain.

The benchmark S&P/ASX200 index was down 41.2 points or 1.1% to 3772.7 at 12.05 AEST, although the dollar fared better, reaching an eight-month high of US78 cents.

ANZ shares lost 1.6% to $15.38, with Commonwealth Bank also losing 0.9% to $35.28. Westpac lost 1% to $19.25 as AMP also lost 1% to $5.20.

Coca-Cola Amatil shares jumped 2.6% to $8.71 after the company confirmed it would announce single-digit growth for first-half net profit, although CCA says it has been affected by falls in consumer sentiment.

“Given the external environment, I am very pleased with how the business is tracking against its key priorities of new product and new customer expansion,” managing director Terry Davis told Business Spectator.

“The material lift in CCA’s service levels has been rewarded by increased business from our customers and strong consumer demand for our market leading brands during this very volatile period.”

But Davis said that the second-half should deliver better results as a result of economic stimulus.

“I would expect that the lower mortgage interest rates, July income tax cuts and continued low petrol prices are all likely to have a positive impact on consumer discretionary spending and, as a result, on CCA’s second half trading,” he said.

Minerals Council of Australia chief executive Mitchell Hooke said that the Government’s emissions trading scheme will erase 23,000 jobs in the industry by 2010.

“It will impose the highest carbon costs in the world on Australia’s mineral exporters,” he said in a statement.

“We share the Government’s commitment to reducing emissions but this modelling shows the (scheme) is fundamentally flawed. By imposing the highest carbon costs in the world on Australia’s mineral exporters, it will eliminate jobs while failing to materially reduce global greenhouse gas levels.”

In the US, Wall Street dropped after fears emerged that the country’s deficit could affect the country’s credit rating, after watching Standard & Poor’s downgrade its rating outlook for Britain. The Dow Jones Industrial Average fell 129.91 points or 1.54% to 8292.13.

Moody’s issued a statement saying the country’s credit rating was safe for now, but that it was not guaranteed to stay at its current level in the future.