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Market Update

Australian Trade Deficit Surges and Retail Sales Growth Accelerates

Author: Marcus Jacob
Last Update: 8:16 AM ET March 05 2015

5:30 PM Sydney Australian trade deficit in January surged on weak commodities prices and retail sales in the month accelerated to 0.4% increase. Fortescue announced a plan to refinance debt and extend bank loans. Woodside won a regulatory approval to acquire Western Australia energy assets.

Stocks in Sydney traded sideways and barely managed to close up after China estimated economic growth to slow down to 7% from 7.5%.

The iron ore price declined 30 cents to US$61.94 a ton after the Chinese announcement and futures trading suggested price to dip as low as US$55 in the next three months.

China has been engineering economic slowdown and eliminating government supported projects as construction projects fail to deliver returns and the government is curbing lending to speculate in the housing market.

Resource stocks led the decliners and Fortescue Metals plans to launch debt refinancing plan to take advantage of lower interest rates and also lower iron ore price.

Seasonally adjusted trade deficit in January surged 95% to $980 million compared to $477 million in December, the Australian Bureau of Statistics reported.

In a separate report the department said seasonally adjusted total value of retail sales in January rose 0.4% to $23.88 billion, followed by 0.2% increase in December and flat sales in November 2014.

Australian dollar closed at 78.18 U.S. cents and in stock trading turnover increased to 841 million shares worth $5.8 billion.

ASX 200 Index edged up 2.60 to 5,904.20 and broader All Ordinaries Index rose 2.20 to 5,873.70.

In commodities trading, gold fell US$3 to US$1,205 an ounce and light crude oil jumped US$1.08 to US$51.60 a barrel.

Brent crude gained 84 cents to close at US$61.39 a barrel.

Australian Stock Movers

Fortescue Metals Group Limited closed unchanged at $2.29 after the iron ore producer launched a $3.2 billion debt refinancing deal to ease any pressure on its balance sheet because of falling iron ore prices.

The company launched a tender to existing senior debt holders to exchange outstanding debt in 2017, 2018 and 2019 for cash, up to US$700 million.

Fortescue also announced that its plans on extend the maturity of its loan of US$4.9 billion senior secured credit facility due in 2019 with a new loan due in 2020 and beyond.

K&S Corporation Limited climbed 4.2% to $1.48 after the conglomerate reported revenues in the first-half ending in December surged 39% to $360 million from $258.9 million a year ago period.

Net profit in the period climbed 16.1% to $6.5 million compared to $5.6 million and diluted earnings per share slipped to 5.6 cents from 6.2 cents in the same period a year ago.

Macquarie Group Ltd gained 1.3% to $74.50 after the investment company completed capital raising of about $500 million to buy 90 aircraft from Dublin-based lessor AWAS Aviation Capital Ltd for $4 billion.

Woodside Petroleum Limited rose 0.4% to $35.23 after the oil and gas producer received a regulatory approval to acquire Western Australian liquefied natural gas and oil assets from the U.S.-based Apache Corp under $3.75 billion agreement of December.

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