The Australian sharemarket opened higher today but was quickly dragged down into negative territory.
The benchmark S&P/ASX200 index was down 30.5 points or 0.81% to 3746.2 at 12.10 AEST. The dollar also edged higher to US72 cents.
AMP shares dropped 2.2% to $5.32, while Wesfarmers lost 3.2% to 20.57. NAB gained 0.3% to $22.20 and Commonwealth Bank shares gained 0.9% to $37.32.
Shares in Sydney-based company OneSteel have dropped more than 12% after the country’s second-largest steel group raised $584 million in an institutional placement.
“The proceeds of this capital raising will significantly strengthen the company’s balance sheet and position OneSteel for the current market environment,” the company said in a statement.
Elsewhere in the resources sector, Rio Tinto chief Tom Albanese has said the company is in the process of making difficult decisions to rebuild.
“By making difficult decisions on cash conservation, debt repayment, capital expenditures, asset sales and employee reductions, we are creating the certainty that we remain a strong company during the current global downturn, and will be ready to grow again when there are meaningful signs of recovery,” Albanese said at the company’s annual general meeting.
“I am convinced that we are making the right choices for long term value creation in terms of our strategy. Going forward, my focus will be on safety, completing and integrating the Chinalco transaction, and settling the business after a very public and difficult year for us all.”
He said that the $US19.5 billion Chinalco deal will help the firm move into new projects.
Also in China, the head of research at the country’s Ministry of Finance has said in a commentary in the China Securities Journal that the economy is bottoming out.
Jia Kang has also said that the Government should introduce more economic expansion policies such as further stimulus if the second quarter figures are worse than feared.
Kang has also warned that the Chinese economy – which has slowed to just 6.1% growth in the first quarter – may need to be boosted by stimulatory policies for the next five years.
Back home, Qantas chief executive Alan Joyce has told ABC television that while his primary focus is to keep core business operating well, mergers are still a possibility.
“We talk to airlines all the time, and if there are opportunities that come along that would be something we wouldn’t close our eyes to and we wouldn’t miss,” Joyce said.
“But at the moment, you know, we see the prime focus as making sure that the core business is focused in on – that we do the right things to get our international business correct and that the merger activity and activity that would be related to acquisitions takes secondary role in relation to that.”
The airline is currently undergoing a major restructure, after announcing 500 management positions and 1250 staff positions will be cut.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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