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Market Update

China Manufacturing Drops to a 3-Year Low, Australian Markets Plunge 2%

Author: Marcus Jacob
Last Update: 9:33 AM ET September 01 2015

5:30 PM Sydney, Australia – Australian markets plunged after the official manufacturing index in China dropped to a three-year low in August. Reserve Bank of Australian held its reference rate and cited slowing down Chinese economy. Myer Holdings plans to raise $211 million in a rights offering.

Australian market indexes plunged after China reported weaker than expected manufacturing data.

The official manufacturing index in August declined to a 3-year low 49.7, indicating that the sector is contracting at a faster pace. Any reading below 50 indicates contraction and above shows expansion.

Separately, a private measure of manufacturing and service sector showed a slowdown as well, despite the People’s Bank of China lowered rates five times since November.

The seasonally adjusted current account deficit in the second-quarter widened 41% to $19.03 billion after the downwardly revised $13.50 billion deficit in the first quarter, the Australian Bureau of Statistics reported.

The balance on goods and services in the quarter a deficit increased to $9.64 billion from a deficit of $4.78 billion in the previous quarter.

Net foreign debt in the second-quarter fell 1% to $976.1 billion from the first-quarter, the ABS said.

Separately, the department said the seasonally adjusted total number of new building approvals in July jumped 4.2% to 19,298 compared to 8.2% decline in June but for the year soared 13.4%.

The seasonally adjusted estimated value of total building approved in July surged 7.8% after decreasing 2.9% in the previous month.

As expected the policymakers leave the key interest rate unchanged at a record low for the fourth meeting in a row.

The policy committee decided to leave the cash rate unchanged at 2%, the Reserve Bank of Australia said.

Australian dollar closed at 71.17 U.S. cents and in stock trading turnover fell to 955 million shares worth $6 billion.

At close, the ASX 200 Index declined 110.60 or 2.2% to 5,096.40 and the broader All Ordinaries Index slumped 105 to 5,117.10.

In commodities trading, gold jumped US$9 to US$1,143 an ounce and Brent crude future for immediate month delivery dropped US$1.54 to US$52.61 a barrel.

Australian Stock Movers

Myer Holdings Ltd was halted at $1.21 and the department store operator said total sales in the year ending in June increased 1.7% from a year ago to $3.20 billion from $3.14 billion.

Profit in the year tumbled 69.7% to $29.83 million compared to $98.54 million and diluted earnings per share declined to 5.1 cents from 16.6 cents.

The retailer today announced a rights issue to raise $221 million priced at 94 cents each, a 22% discount to its closing price on Monday.

OceanaGold Corporation surged 10.2% to $2.59 after the gold producer lifted total gold production estimate for the year ending in December between 380,000 ounces and 410,000 ounces, includes 65,000 ounces to 70,000 ounces from Waihi.

Total copper production is estimated for the year in the range of 22,000 tons to 23,500 tons.

Qantas Airways Limited slumped 1.7% to $3.47 after the state-controlled airline said total passengers in July increased 2.1% to 4.43 million and revenues per available seat gained 1.6% to 82.4% from a year ago month.

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