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Market Update

Australian Indexes Drop 1.3%, Boart Signals Weaker Rig Services Market

Author: Marcus Jacob
Last Update: 9:25 AM ET May 19 2014

5:00 PM Sydney – Australian market indexes declined 1.3% on weak iron ore prices and weak outlook for domestic housing prices. Goodman Fielder backed revised takeover offer from two bidders. Boart Longyear cautioned market conditions for drilling rig services may worsen.

Australian market indexes dropped on the weak iron ore prices and a bump in small cap trading boosted overall market volume.

Australian dollar dropped to 93.53 U.S. cents and stock market trading turnover jumped to 754 million shares worth $4.06 billion.

The ASX 200 index dropped 70 or 1.3% to 5,409 and the broader All Ordinaries slumped 68.60 to 5,390.30.

Market sentiment was weak after a private housing survey conducted by ANZ showed its first sign of slowdown in housing prices. The seasonally adjusted home prices declined in all capital cities and prices in Melbourne declined for three weeks in a row.

Stocks in Review

Rio Tinto dropped $1.85 to $60.10. BHP fell 65 cents to $37.43. Woodside Petroleum Limited decreased 1.5% to $41.11.

Westpac Banking Corp slumped 50 cents to $33.78.

Baort Longyear Limited eased 4% to 21 cents after Chief Executive Richard O’Brien warned at the annual general meeting that the worldwide exploration and mining expenditure is likely to contract further this year and excess global rig capacity could depress pricing for its services.

The company’s fortunes have reversed sharply and in 2013 the rig services provider reported a loss of $693 million from net profit of $66 million.

The company has eliminated 3,300 jobs and closed 65 facilities and the stock has plunged from the peak of $5 in the last quarter of 2011.

DuluxGroup Limited gained 0.5% to $5.76 after the paint and coatings maker reported revenue in the first-half ending in March climbed 16.5% to $804.45 million from $690.75 million a year ago.

Profit in the period surged 97.6% to $59.35 million compared to $30.04 million and diluted earnings per share surged to 15.8 cents from 8.6 cents a year earlier.

Bradken Limited declined 7.6% to $3.62 after the mining wear-components supplier will restructure its manufacturing unit to reduce its operating costs by $27 million with a one-time charge of about $54 million before-tax in 2014.

Discovery Metals Limited surged 25% to 0.035 cents after the copper producer said the company and its lenders agreed to reduce the existing interest debt up to $59 million.

UGL Limited plunged 9.7% to $6.86 after the engineering company received only one offer to acquire a portfolio of seven properties held by its real estate subsidiary GDI Property Group Limited for about $1.2 billion.

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