The Australian share market has opened flat today despite a rally on Wall Street last Friday.
The benchmark S&P/ASX200 index was down 19.2 points or 0.41% to 4674 at 12.00 AEST. The Australian dollar also lost some ground to US86c.
ANZ shares fell 1.3% to $22.87, while NAB shares dropped 1.9% to $29.29. AMP fell 1.4% to $6.16 as Westpac lost 1.3% to $24.58.
Qantas chairman Leigh Clifford has said in the company’s annual report that the outlook for the company is uncertain and that underlying business conditions have not yet seen a recovery.
“Uncertainty is also being created through significant capacity increases, domestically and internationally, by Qantas Group competitors, some of whom enjoy very favourable taxation and other arrangements,” he said, but ultimately acknowledge the company is in a strong position.
“With the strengths of its two flying brands, strong management and dedicated people, the Qantas Group is well-positioned to withstand this period of downturn, and will be ready to grasp opportunities fully during the eventual recovery.”
Financial regulation on top of G20 agenda
Overseas, it seems financial regulation will be the main topic discussed at the G20 summit in Pittsburgh. US president Barack Obama said in his weekly radio address that his administration is set on preventing another financial crisis from occurring.
“As the world’s largest economy, we must lead, not just by word, but by example,” he said.
“We know we still have a lot to do, in conjunction with nations around the world, to strengthen the rules governing financial markets and ensure that we never again find ourselves in the precarious situation we found ourselves in just one year ago.”
Meanwhile, German chancellor Angela Merkel said in her weekly podcast that she was also keen to look at financial regulation, stating that: “We can work toward ensuring a [financial] crisis like this is not repeated worldwide”.
In New York, Prime Minister Kevin Rudd told CNN that any withdrawal of fiscal stimulus is “misplaced”, and the Australian Government’s stimulus plans had helped the country escape recession.
“We’ve managed to be the only economy across the OECD (Organisation for Economic Cooperation and Development) in the last 12 months to have generated positive growth… the only one to stay out of recession so far, the second lowest unemployment, the lowest debt, the lowest deficit,” he said.
Rio Tinto flags long-term aluminum demand growth
In signs that Australia’s long-term economic fortunes will be closely tied to the resources sector, mining giant Rio Tinto has forecast 4.1% growth in aluminium demand for the next 20 years, but says it is cautious about the future of the market.
Chief executive Jacynthe Cote said in a presentation to investors that cost-cutting and preservation of cash are the top priorities for the company, and that earnings before interest, tax, depreciation and amortisation had been positive in the first half of the year. However, the company said it is hesitant about proclaiming a full-blown recovery.
“The possibility of a W-shaped scenario, where growth returns for a few quarters before petering out once more, would slow down aluminium shipments and make additional contributions to an already high stock level,” vice president Carmine Nappi said in a statement.
The company recorded a 54% decline in first-half earnings to just $US2.56 billion, with its aluminium division recording a $US689 million loss.
Meanwhile, sales of new motor vehicles rose by a seasonally adjusted 0.3% during August, according to new figures released today by the Australian Bureau of Statistics.
The figures show that a total of 75,388 vehicles were sold during the entire month, but in the year to August, sales have fallen by a total of 6.2%.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
