- The New Zealand NZX 50 Index closed at 12,761 points, down 68 points, or 0.54%.
- The ASX Australia market fell Thursday after reports from several sources.
- Telstra Corporation (TSL), which is the second-largest telecommunications company in Australia, saw its shares decline.
The three major U.S. stock indexes closed overnight and developed individually. The market is concerned about when tourism and aviation and other industries will return to normal. The stock markets in Australia and New Zealand are soft. The Australian common stock index closed at 7,122 points, down 11 points, or 0.16%.
The New Zealand NZX 50 Index closed at 12,761 points, down 68 points, or 0.54%. Japan and South Korea are closed for the Lunar New Year.
The ASX Australia market fell Thursday after reports from several sources. The major contributing force to this decline is the weaker dollar, however other than that there are many other reasons for the loss of confidence in the Aussie share market.
The country has traditionally been a strong cash crop and has relied on heavy investment from overseas.
Now that global growth is slowing down and currencies are becoming more dependent on US Dollars, Australian stocks have been affected by the same issues that have affected similar companies in the past.
Telstra Corporation (TSL), which is the second-largest telecommunications company in Australia, saw its shares decline. Some analysts think that this could be related to the fact that TCL is in the process of buying another business, its High-Tech Asia unit.
However, the decline didn’t stop the company from posting a strong quarter and the stock is on the rise again.
“After a decade of disruption following the creation of the NBN, and with its rollout now declared complete, we can clearly see the path to underlying growth ahead of us,” Telstra’s chief executive Andy Penn noted in the company’s report.
“We responded strongly to the financial headwinds created by the NBN through our T22 strategy. Telstra today is a leaner, more responsive, and more agile company than it has ever been.”
Shares of Whitehaven Coal fell below the leading Australian Stock Index (ASX) by just over one percent and is now showing no signs of gaining momentum. Other smaller ASX companies, like Greenmount Power Generation and Adeel Med Technologies, saw their shares decline, while shares of Australian Energy Group (AEG) saw little change.
One of the reasons for the poor performance of these companies is that overall profit margins for the group as a whole decreased year over year.
Another big hit to the ASX Australia market was the sale of Whitehaven Coal to Whitehaven Energy Limited, which is controlled by Japanese conglomerate Sumitomo Corporation. Sumitomo owns 50% of the corporation and is looking to take control of a large part of Australia’s coal production.
This is bad news for investors in Whitehaven Coal and for the country as a whole, since it will likely lead to an increase in the import cost of the commodity and this hurts the economy. In Australia, the impact will be felt as gross domestic product growth is expected to slow down slightly in the second half of the year.
With the decline in Whitehaven Coal, there was also a decrease in the ASX Top Ten Listings for energy & utilities. Another company that fell on the ASX Australia list was Newcrest Mining Corporation.
It has already signed deals with Australia’s Whitehaven Resources Limited for a proposed open-pit mine in the Blue Mountains. As this project nears completion, the stock price for Newcrest Mining Corporation has declined in Australia.
In the financial services industry, there was a notable decline in overall shares. The market sector contracted by 3% in the fourth quarter of 2011. This comes as a surprise considering that this was a major earnings report.
According to analysts, there was a slight increase in profits as compared to the third quarter but profit margins did not improve as much as they did in the second quarter. There are many factors that could be behind this situation such as a shift in the market sector and the slowing economy in the United States.
In Australia, the housing market dropped by one percent in the third quarter. However, the state government released statements that indicate the overall residential construction market has picked up and is expected to see positive growth over the next few quarters.
Similarly, the overall stock market saw a small increase in the third quarter. Most analysts believe the Australian market will continue to show signs of strength and interest in the coming quarters despite the economy slowing considerably in the United States.
The mining industry has been hit hard by the global recession. However, the slowdown in the United States saw a significant decrease in mining stocks worldwide.
In Australia, the BHP Billions Global Corporation and the Newscorp Limited companies saw a sharp decline in their stock prices. However, the economy is expected to recover soon and these stocks should resume growth in the near future.