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Market Update

Australian Dollar Drops to 3-Year Low on Mild Inflation Index Data

Author: Marcus Jacob
Last Update: 8:21 AM ET August 01 2013

5:00 PM Sydney – Australian indexes gained after home prices rose for the second month in a row in July. The Aussie dollar dropped to a 3-year low after consumer price index increased at a slower pace of 0.6% in the second quarter. Australian manufacturing industry showed a shrinkage in July.

Market indexes in Sydney opened higher on the back of better-than-expected economic growth data in the U.S. but the mixed batch of manufacturing reading in China and Australia tempered enthusiasm.

Also, Australian dollar fell to a 3-year low after the latest read on consumer price index showed a smaller-than-expected increase of 0.6% in the quarter ending in June.

The dollar is down 13.8% in the year so far and is the second worst performing currency trailing 14% decline in South African rand.

Australian Industry Group’s Performance of Manufacturing Index declined to 42 in July, any read below 50 indicates a decline. The index declined for the 25th month in a row.

New home sales across Australia increased 3.4% in June, according to a government report. Single home sales increased 7.3% but multi-unit apartments plunged 17.5%.

In addition, home prices rose at metropolitan locations for the second month in a row in July according to a report released by RP Data-Rismark. The index increased 1.6% in the month.

The ASX 200 index edged up 9.50 to close at 5,061.50 and the broader All Ordinaries increased 11.40 to 5,047.10.

Australian dollar declined to 89.70 U.S. cents and in stock trading turnover climbed to 820 million shares worth $4.9 billion.

Stocks in Review

Rio Tinto jumped 43 cents to $57.94 and BHP climbed 53 cents to $35.17. Woodside Petroleum Limited increased 67 cents to $38.26.

FAR Limited soared 23% after the oil and gas explorer signed a deal with the U.S. based ConocoPhillips to drill for oil off the coast of Senegal.

David Jones Limited closed unchanged at $2.70 and Breville Group gained 21 cents to $7.75. Woolworths advanced 19 cents to $33.51.

Mirvac Group closed unchanged at $1.64. Lend Lease rose 22 cents to $8.99.

Westpac slid 2 cents to $30.87 and Commonwealth dropped 1.5% to $73.12. National Australia Bank decreased 50 cents to $30.73 and ANZ slipped 37 cents to $29.39 after the bank today launch its first gold vault in Singapore.

Elders Limited surged 11.4% after the services provider in rural area said it plans to sell its auto division to the U.S. based private equity firm Clearlake Capital Group for $69 million to reduce the debt.

Leighton Holdings Limited gained 1.4% to $16.75 after the civil engineer subsidiary Thiess secured contract for $650 million to deliver Moreton Bay rail link.

Suncorp Group Limited dropped 2.9% to $12.45 after the insurance and lender estimated profit for the year to decline as much as 34% to between $480 million and $500 million compared to $724 million a year ago.

The insurer also lifted its dividend and sold its non-core asset portfolio to Goldman Sachs.

Transurban Group climbed 2.6 to $6.96 after the infrastructure developer reported net profit for the year ending in June rose to $171.7 million from $54.9 million a year earlier and underlying performance jumped 5.6% to $828 million.

Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc