Telstra shares climb 5% on NBN announcement, mining jobs slashed: Economy roundup

Shares in Telstra have climbed 5% after the Government announced it will form a new entity to construct the $43 billion national broadband network.

Telstra had been locked out of the original bidding process, but the Government’s new plan, under which it will invite the private sector to contribute to the Govermnent-controlled plan, gives the teclo giant a seat at the table.

On the downside, the fibre-to-the-home network will make Telstra’s copper connections irrelevant.

Telstra’s shares have since settled to be up 2.2% to $3.28 at noon AEST.

Meanwhile, the Australian sharemarket has opened lower today following negative leads from Wall Street. The benchmark S&P/ASX200 index was down 37.6 points or 1% to 3719 at 11.50 AEST. The Australian dollar has remained steady at US71 cents.

ANZ shares dropped 0.9% to $17.04, while Westpac lost 0.5% to $20.59. NAB lost 2.3% to $23.05 as AMP gained 1.1% to $5.31.

The latest Dun & Bradstreet National Business Expectations Survey has shown that about 57% of companies expect declining sales in the June quarter, along with 64% expecting declines in profits.

The employment growth indicator has dropped to the lowest level in the history of the survey, while about 12% of companies expect to decrease capital investment.

The survey also shows that 49% of companies experienced lower sales in the December quarter (up 9% from the September quarter) while around 63% experienced lower profits (an 8% increase from the previous quarter).

Chief executive Christine Christian says the survey shows that businesses are yet to experience any boost from the Government’s stimulus packages.

“The Government’s stimulus packages are critical to providing support for business. However, the deteriorating outlook, particularly for employment, is a sign that no one expects the benefits to be realised immediately, and that things are likely to get worse before they get better,” she says.

“The deteriorating outlook for inventories is a clear sign that executives are adopting a wait and see approach as they seek to tightly manage costs.”

More job cuts have been announced, with Rio Tinto set to slash 705 jobs from two Alcan mines in Queensland.

Rio Tinto Alcan bauxite and alumina president Steve Hodgson said the decision was based on poor demand in the industry.

“Even with alumina industry capacity cuts equivalent to 21 million tonnes per year since the beginning of the crisis, including cuts of 12 million tonnes made since January, there is still little improvement in the alumina price,” he told Business Spectator.

“At current prices, around 70% of the industry is currently operating at a financial loss.”

Meanwhile, construction equipment manufacturer Caterpillar will slash 280 jobs from its 700-large Tasmanian workforce by the end of the month.