Unemployment data rocks our stocks

A SURPISE drop in unemployment data from January saw the Australian market head further into positive territory today.

Christine Feary

While European markets remained strong today on increasing speculation that Greece will be offered financial support to deal with mounting debts, suggestions of a rate rise in the US weighed on Wall Street, with the Dow Jones Industrial Average closing down 0.2% at 10038.38 points.

The release of data from the Australian Bureau of Statistics showing that unemployment fell to 5.3% in January, down 0.2% on December, helped to bolster Australian markets, with the S&P ASX 200 closing up 0.91% at 4554.3 points.

However, analysts suggested the strength of the economy indicated by the jobs data could mean an interest rate rise when the Reserve Bank of Australia meets in March.

Rio Tinto came out the highest real-term gainer today, with an increase of $A1.78 to $69.72, unscathed by news the Chinese government intends to press charges against four employees for accepting bribes and infringing trade secrets.

Stern Hu, Wang Yong, Ge Minquang and Liu Caikui have been detained since July 5 2009, originally on the more serious charge of state espionage.

Rio released a statement late today saying it hoped for a transparent and expeditious process for its employees.

Chief executive iron ore Sam Walsh said: “We are very concerned about the nature of these charges, however as this is part of an ongoing legal process, it is inappropriate to comment any further.”

Dow Jones Newswires reported it is likely the men will have a closed-door trial with no media allowed to attend.

Meanwhile, Rio announced underlying earnings for 2009 of $US6.3 billion, down 39% from $10.3 billion in 2008.

The miner said earnings reflected the scale and strength of operating performance, notably in the second half of 2009.

Underlying earnings before interest tax depreciation and amortisation (EBITDA) was $14.3 billion, down 36% from $22.3 billion in 2008.

BHP Billiton also had a strong day, gaining A47c to $40.35 following the finalisation of the sale of the Ravensthorpe nickel mine to Canadian miner First Quantum Minerals.

First Quantum has made public its intention to get the mine back up and running within 18 months, after formally taking control of the site yesterday.

The company intends to spend 12 months modifying the plant, with a further six months to commission and ramp up the mine.

Over at Fortescue Metals Group, founding director Graeme Rowley has announced his resignation as an executive director of the company, effective from March 2. He will continue with the company as a non-executive director.

News of Rowley’s impending departure from the FMG board did not dampen investors’ spirits today, with the company rising 11c to $4.75.

Fellow iron ore producer Mount Gibson Iron announced its results for the half year to December 2009, showing that profit for the period nearly tripled from the previous year.

Net profit after tax for the period was $39.4 million, compared with $13.3 million in the six months to December 2008.

Managing director Luke Tonkin said the corresponding period in 2008 was “one of the most difficult for Mount Gibson”, with the company impacted by factors beyond its control.

“This included the failure of some customers to honour their long-term iron ore agreements, the severe downturn in commodity demand and the resulting global financial crisis,” he said.

Sales revenue for the half year rose 5.2% on year to $A242.3 million. The company’s share price rose 13c on the news, closing at $1.53.

It was a good day for gold miners, with the spot gold price sitting at $US1079.80, up 0.72%, at 4:25 AEDT. Newcrest Mining rose A63c to $32.44, while Lihir Gold rose 4c to $2.86.

Avoca Resources gained 12.5c to $1.87 on confirmation of the release of Dioro’s target statement to its shareholders, while Dioro rose 4c to $1.24.

At the other end of the scale, Eldorado Gold had the biggest real-term drop today, shedding 33c to close at $14.04 on no news.

Range River Resources had the greatest percentage drop of the day, falling 18.4%, or 0.7c, to 3.1c after coming out of a trading halt, during which it announced a successful capital raising.

Range River completed the placement of 107.1 million shares at 2.8c a share to raise a total of $3 million. The company also announced a renounceable rights issue to shareholders that will aim to raise up to $5.4 million.

Meanwhile, Gascoyne Mines had the highest percentage gain, its share price increasing 36.36%, or 4c, to 15c.