Housing finance up, Wesfarmers under pressure, will Obama’s stimulus work? Economy roundup

This morning’s big economic news contained a glimmer of hope for the property sector, with housing finance commitments jumping 1.3% in November 2008, just above market expectations.

This morning’s big economic news contained a glimmer of hope for the property sector, with housing finance commitments jumping 1.3% in November 2008, just above market expectations.

The value of owner-occupied house finance also jumped 1.4% to $12.46 billion as the RBA’s sharp cuts to interest rates finally had some effect. But it wasn’t all good news – the value of investment housing fixed loans dropped 6.1% to $5.03 billion.

“Housing finance has moved into recovery mode, in response to the sharp policy u-turn by the RBA and aided by Government incentives for first home buyers,” the Westpac economics team wrote following the release.

Sharemarket falls

The Australian sharemarket opened higher today, but soon dropped following a fifth consecutive day of losses on Wall Street. The benchmark S&P/ASX200 index was up 7.6 points or 0.21% to 3662.2 at noon AEDST.

NAB shares gained 0.5% to $20.46, ANZ rose 0.7% to $14.95 and Woolworths also gained 0.4% to $26.47. BHP Billiton has been a good bellwether for the market – it rose 1.64% in early trade, then slipped to be 0.5% down by noon.

The dollar also lost ground following a drop in the US trade deficit, falling back to US66 cents.

The Dow Jones Industrial Average closed down 24.51 points or 0.3% to 8448.56. Oil prices closed higher, settling at $US37 a barrel.

Downturn hits the supermarkets

The big corporate news for the morning came from Wesfarmers, which says it may cut its dividend during the current financial crisis due to pressure on its earnings and falls in the value of some of its assets.

The group, which owns the nation’s second-largest supermarket chain Coles, saw its shares drop 3.5% to $16.88 after the announcement.

“The group’s full year outlook is particularly dependent on retail trading conditions, coal-price negotiations and sales volumes, and general economic conditions,” the company said.

“The company may not be in a position to pay dividends for fiscal-year 2009 at the previous guidance level.”

Stimulus under fire overseas

In a speech in London, US Federal Reserve chairman Ben Bernanke warned Barack Obama’s planned stimulus package may fail to boost the US economy, and that the US Government may need to buy or guarantee bank assets.

“Fiscal actions are unlikely to promote a lasting recovery unless they are accompanied by strong measures to further stabilise and strengthen the financial system,” Bernanke said in a speech at the London School of Economics.

“More capital injections and guarantees may become necessary to ensure stability and the normalisation of credit markets.”

New Yahoo CEO

Troubled internet giant Yahoo is poised to announce Carol Bartz as the company’s next chief executive, according to The Wall Street Journal.

The paper reports that Bartz, former chief executive of software company Autodesk, is tipped to take the job. If correct, the move would end a two-month search for a new chief after Jerry Yang’s resignation in November.

You can help us (and help yourself)

Small and medium businesses and startups have never needed credible, independent journalism and information more than now.

That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.

Now, there’s a way you can help us keep doing this: by becoming a SmartCompany supporter.

Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.



Notify of
Inline Feedbacks
View all comments