Shares climb again, Government will own majority of NBN: Economy roundup

The Australian share market has opened higher for a fifth consecutive day after mixed results from Wall Street last week.

The rest of the week’s results will likely rest with the US market, where major companies such as American Express, Apple, Boeing, Caterpillar, Coca-Cola, McDonald’s and Microsoft are set to release their financial reports.

The benchmark S&P/ASX200 index was up by 49.7 points or 1.24% to 4050.5 at 12.00 AEST. The Australian dollar also gained ground, moving up to US80c.

Commonwealth Bank shares moved up by 0.8% to $39.80, while NAB shares also increased by 0.3% to $23.86. Westpac shares jumped by 0.5% to $20.37, while ANZ fell by 0.1% to $16.75.

General Electric has announced a profit decline of nearly 50%, on the back of a steeper decline in revenue than expected.

Revenue fell 17% to $US39.08 billion, higher than the 10% expected by analysts. Second quarter net profit fell from $US5.07 billion to $US2.67 billion.

“Hitting the bottom line number was pretty good news, but that top line revenue, that’s a big miss,” Huntington Asset Advisors senior vice president and portfolio manager Peter Sorrentino told Reuters.

Producer price index down

The Australian producer price index has dropped by 0.8% in the second quarter due to price decreases in machinery and equipment manufacturing, building construction and electronic equipment manufacturing.

The index increased by 2.1% year on year, while prices in industrial machinery and equipment manufacturing dropped by 5.6% during the June quarter. Fortunately, motor vehicle and part manufacturing saw a 2% increase and petroleum refining saw a 5% increase.

NBN to remain Government-owned

Meanwhile, communications minister Stephen Conroy has told ABC’s Inside Business that the Government will maintain a majority stake in the National Broadband Network despite the final structure of its ownership.

“There’s one cap that is not negotiable and that’s the Government maintaining 51%,” he said. “It will be sold down but it won’t be able to be sold to retail companies in the future.”

Conroy also said the Government is considering a number of options regarding ownership, including a direct ownership by Telstra shareholders if the company demergers its wholesale and retail businesses.

“I think that’s a very sensible suggestion that a number of people have made recently and it’s certainly something we’d be prepared to consider,” he said.

WIN silent on Quickflix capital raising

The WIN Corporation, owned by billionaire Bruce Gordon, has yet to release a statement indicating either its support or opposition to a capital raising by Quickflix, of which it is the biggest individual shareholder.

Quickflix, an online-based DVD rental company with around 30,000 subscribers, mailed to its shareholders documents for the rights issue that the company hopes will raise up to $1.2 million to support recent subscriber growth.

Quickflix executive director Stephen Langsford told The Australian that funding from the rights issue would leave the company “funded to execute our expansion plans”.

“We signalled to the market through the commentary in our recent quarterly report that we expect to build on the 18% growth in subscriber numbers of the past six months,” he said.

“With more consumers spending their entertainment dollars at home, and a soft advertising market, it’s a good environment for Quickflix to make a push.”

BHP searches for chair

Commonwealth Bank of Australia chairman John Schubert is a possible candidate to take over BHP Billiton’s chief executive role from Don Argus when he writes, the Sunday Telegraph paper in Britain has said.

“Jacques Nasser, a former chief executive of Ford, and John Schubert, a former managing director of Esso Australia, are expected to be interviewed by the company’s succession planning team later this week,” it said.

“Mr Schubert is understood to be keen to relinquish the chairmanship of the Commonwealth Bank of Australia, in order to take on the role at BHP. Although Mr Argus, 70, has not announced his intention to retire, the company has said succession planning is `well in hand’.”