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Market Update

Australian Trade Deficit Surges on Higher Dollar and Weak Iron Ore Price

Author: Marcus Jacob
Last Update: 10:29 AM ET July 02 2014

5:00 PM Sydney – Australian stocks jumped and the Aussie dollar held despite the May trade deficit soared 145% and was the widest in eighteen months. Weak iron ore prices and 6% increase in Aussie dollar contributed to the deficit. Australand Property Group accepted $2.6 billion offer.

Stocks jumped at opening and market indexes opened higher 1% and stayed above the mark and closed up 1.5%. Trade deficit in May ballooned and the Aussie dollar gained despite the sharp rise in deficit.

Seasonally adjusted trade deficit soared 145% to $1.91 billion from the revised $780 million in April, the Australian Bureau of Statistics reported today.

In the month, exports declined 5% and imports eased 1%.

The deficit surged on strong Australian dollar and weak iron ore prices and the negative trade balance was the largest since January 2013.

Australian dollar inched up to 94.59 U.S. cents and stock trading turnover gained to 732 million shares worth $4.42 billion.

The spot iron ore price traded near US$94.20 a ton, not that far from the 20-month low of US$89 a ton reached last month.

ASX 200 index climbed 79.50 or 1.5% to 5,455.40 and the broader All Ordinaries jumped 75.20 to 5,441.70.

Smartgroup, the provider of professional services priced its initial public offering at $1.60 a share and closed at $1.44.

Stocks in Review

Australand Property Group gained 0.9% to $4.48 after the industrial property developer’s directors approved $4.48 per share cash offer from Singapore-based Frasers Centrepoint Limited in a deal valued $2.6 billion.

Goodman Fielder Limited declined 3.7% to 65.5 cents after the food ingredients maker convinced shareholders to accept a lower takeover offer from Wilmar International Ltd and Hong Kong-based First Pacific Co, valuing the company at $1.32 billion.

A month ago, the company rejected the first offer of 65 cents per share which was later revised to 70 cents a share or $1.37 billion and the board finally accepted 67.5 cents a share offer.

Northern Star Resources Limited rose 0.3% to $1.32 after the gold producer signed an agreement to acquire a mine in Western Australia from Newmont Mining for US$91 million.

Vocus Communications Limited surged 8.2% to $5.15 after the communications service provider agreed to acquire New Zealand-based FX Networks, the fiber provider for $107.7 million.

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