Shares rebound after big losses, Oil falls to five-year lows, Centro wins reprieve: Economy roundup

The Australian sharemarket remains no place for the faint hearted. After falling by more than 4.2% yesterday – wiping around $40 billion off the value of the market – the sharemarket opened up 1% this morning after a good night on Wall Street.

The Australian sharemarket remains no place for the faint hearted. After falling by more than 4.2% yesterday – wiping around $40 billion off the value of the market – the sharemarket opened up 1% this morning after a good night on Wall Street.

 

The benchmark S&P/ASX200 index was up 32 points or 0.91% to 3561.5 at 12.00 AEDST.

 

BHP Billiton shares leapt 3% to $29.77, while Commonwealth Bank shares gained 1.2% to $27.64.

 

The dollar gained some ground, trading at US66 cents.

 

Overseas, Wall Street rose on hopes the US Government will spend more to try to bring the country out of recession. The Dow Jones Industrial Average rose 12.35 points or 0.15% to 8212.49.

 

But oil traders are bracing for a prolonged downturn and have sent the price of oil to nearly five-year lows at around $US35 a barrel.

 

Stimulus plans take shape

 

In Washington, Democratic Party leaders have revealed a $US825 billion tax cut and spending bill that they believe will help bring the country out of recession.

 

But while the bill will swell the country’s $US1.2 trillion budget deficit, House Speaker Nancy Pelosi says the legislation isn’t so big “that it’s weighed down”.

 

The legislation offers $US550 billion in spending initiatives including infrastructure projects, along with $US275 billion in temporary tax benefits over two years.

 

Bank bailout

 

The Bank of America remains in talks with the US Government regarding $US15 billion in additional funds to help keep the bank afloat.

 

Reuters reports the bank will announce a government deal on Tuesday, which will help the company absorb last month’s acquisition of Merrill Lynch.

 

Corporate news

 

The airline industry remains under sever pressure, with Singapore Airlines announcing it will be cutting flights to Australia, China and India. The company will also cut flights to London and Zurich.

 

Centro Properties shares jumped 37.5% to $16.5 cents after the group announced a three- year extension on its $3.9 billion debt facility.

 

“The three year debt stabilisation agreement achieves our objective of securing the long term viability of the group, and will have the effect of maximising cashflow through the re-structuring of our debt arrangements and minimising asset sale requirements,” chief executive Glenn Rufrano says.

 

“This debt stabilisation provides sufficient time and liquidity to navigate difficult market conditions and maintain focus on our shopping centres and the operation of the funds management business.”

 

Also back home, Ten Network’s biggest shareholder Canwest may sell off its assets as it struggles to meet debt covenant conditions.

 

The company, which owns a 56.6% share of the Ten Network, announced it may not be able to meet its covenants if deteriorating economic conditions continue, prompting Ten shares to slide 6.3%. Ten shares were trading at $1.015 at 11.49 AEDST.

 

More jobs news

 

And in yet another sign businesses are cutting back on hiring, the SEEK Employment index reports new job advertisements fell a seasonally adjusted 7.4% for December.

 

SEEK Employment managing director Joe Powell says while the job market remains tough, there are still markets with skills shortages which are eager to hire.

 

“The December results once again suggest that to remain competitive in today’s job market, you really need to look at up-skilling,” he says.

 

 

 

 

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