Sharemarket surges but auction clearances weak: Economy roundup

Despite a rush of poor profit results, the Australian sharemarket has enjoyed one of its best mornings in weeks.

Despite a rush of poor profit results, the Australian sharemarket has enjoyed one of its best mornings in weeks. Strong interest in consumer, financial and property stocks has helped lift the S&P/ASX200 2% above Friday’s close to 5031.9 at 11.45am. The Australian dollar is trading at US86.36c.

One of the financials that has done well this morning, National Australia Bank, has announced plans to launch a new internet bank to compete with recent fast movers in the sector such as ING Direct and Rabo Plus. According to Business Spectator, the internet bank will focus on securing retail and superannuation deposits and will be fully guaranteed by NAB.

Auction clearance rates were mixed over the weekend, with Sydney managing to maintain its 54% rate from last weekend but Melbourne dropping from 66% to 63%. Adelaide and Brisbane both bounced back from weak performances last weekend to record 45% and 35% clearance rates respectively.

Turning to company results, Fremantle based microbrewery Little World Beverages has joined the ranks of consumer firms defying the downturn to post strong 2007-08 profit results.

The company, which makes the popular Little Creatures range of beers, lifted net profit by 14.4% to $3.4 million thanks to a growing presence in eastern state markets.

Curtain and blind company Kresta Holdings also managed to bring in a 4.8% rise in 2007-08 net profit to $4.3 million, despite consumer wobbles triggered by high rates and fuel prices hampering demand during 2008.

The strong Australian dollar has been a tonic to Jetset Travelworld, with an increase in Australians travelling overseas helping the travel agency to a 17% jump in net profit to $15.3 million in 2007-08.

But the dollar had the reverse effect for export oriented engine technology firm Orbital Engines, with its 2006-07 profit of $1.3 million falling to $500,000 in 2007-08 because of the unfavourable exchange rate of the past year.