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Market Update

Iron Ore Price Falls Below $50, Australian Trade Deficit Widens

Author: Marcus Jacob
Last Update: 8:52 AM ET April 02 2015

5:30 PM Sydney Australian market indexes gained on the final day of holiday-shortened week and iron ore prices extended losses to the sixth day in a row. The ongoing correction in the iron ore prices also contributed to the widening of trade deficit in February.

Australian market indexes closed higher and resource stocks edged lower on the additional weakness in iron ore, oil and commodities prices.

Iron ore prices for China delivery declined for the sixth day in a row and closed at US$49.53 a ton, below US$50 price level for the first time in six years.

The sharp fall in iron ore prices also affected the value of exports in the month of February, helping to widen trade deficit.

On the economic front, seasonally adjusted trade deficit in February widened to $1.26 billion compared to $1 billion deficit in January, the Australian Bureau of Statistics reported today.

Exports in the month jumped 1% to $27.874 billion and imports climbed 2% to $29.13 billion.

In a separate report, the department said total job vacancies in February soared 6.3% to 151,600 and the number of job vacancies in the private sector jumped 4.9% to 138,400 from a year ago month.

Australian dollar closed at 75.90 U.S. cents and in stock trading turnover declined to 694 million shares worth $4.7 billion.

At close, the ASX 200 Index jumped 37.80 or 0.6% to 5,898.60 and the broader All Ordinaries Index gained 36.80 to 5,869.70.

In the shortened week, the ASX 200 decreased 0.4%.

In commodities trading, gold surged US$17 to US$1,204 an ounce and Brent crude slid 43 cents to close at US$56.67 a barrel.

Australian Stock Movers

Austal Limited jumped 2.5% to $1.82 after the aluminum vessels maker secured contract from the U.S. Navy for two additional Littoral Combat Ships totaling the orders to US$691 million.

With the latest order for two vessels, the U.S. Navy has increased its total order size to 10 valuing at US$3.1 billion.

The U.S. Navy may place an order for additional three LCS in the fiscal 2016 increasing the total number of LCS built to 13.

Bradken Limited surged 18% to $2.29 after the mining equipment maker confirmed that it was approached by the Pacific Equity Partners and Kansas-based and privately held Koch Industries Inc made unsolicited non-binding proposal worth about $2.50 per share or $325 million.

QBE Insurance Group Ltd climbed 4.9% to $13.42 after the insurance company reported gross written premium in the year ending in December declined 9% to $16.33 billion from $17.97 billion in a year ago period.

Net in the year swung to profit $742 million compared to a loss of $254 million and diluted earnings per share swung to 55.8 cents from diluted loss per share of 22.8 cents.

The insurer forecasted gross written premium for the fiscal 2015 in the range of $15.5 billion to $15.9 billion and insurance profit margin between 8.5% and 10%.

Spark New Zealand Ltd gained 0.3% to $3.01 after the digital data and voice services provider divested its international voice business to My Net Fone for around NZ$22 million but kept its international data business.

The transaction is expected to complete during this month.

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