Producer prices fall, shares slide again: Economy roundup

Producer prices fell 0.4% during the December quarter due to price falls in petroleum refining, electronic equipment manufacturing and machinery and equipment manufacturing.

However, these were offset by price increases of 11.2% in agriculture and 0.3% in building construction.

Stage two commodities fell 0.9% due to decreases in grain, sheep, beef and dairy cattle farming of 7.2%, iron and steel manufacturing decreases of 6.6% and petroleum refining of 3.6%.

Stage one commodities decreased by 0.8% in the December quarter, due to decreases in iron and steel manufacturing of 6.7%, basic chemical manufacturing of 5.1% and petroleum refining of 3.4%.

However, these were partially offset by price increases in oil and gas extraction of 3%, and services to transport of 4.5%.

Meanwhile, the Australian share market has dropped over 1% today due to poor trading on Wall Street last week, after investors were concerned for US banks after President Barack Obama proposed harsh regulation reform.

The benchmark S&P/ASX200 index was down 54 points or 1.15% to 4696.1 at 12.00 AEST. The Australian dollar also fell to US90c.

AMP shares fell 2% to $6.42, while Commonwealth Bank shares dropped 1.3% to $55.05. Westpac lost 1.8% to $24.93, while NAB los 1.1% to $26.42.

Infrastructure fundraising falls

Global infrastructure fundraising fell by more than 50% during 2009 due to investors moving their money into liquid assets, new data from Probitas Partners reveals.

Only $US10.7 billion was raised by funds, compared to the $US24.7 billion figure raised during 2008. This also comes after $US34.3 billion was raised during 2007.

Probitas said in a statement infrastructure assets including roads, airports and power grids are not as appealing during a credit crunch.

“Investors began to come back to the market in the fourth quarter, with fundraising topping $US10 billion for the full year after only hitting $US6 billion over the first nine months,” partner Kelly DePonte said in a statement.

“The likelihood is that fundraising will increase in 2010, though it is unlikely it will surge dramatically as a number of investors still have liquidity concerns.”

But Australia infrastructure spending is expected to increase, according to Prime Minister Kevin Rudd, who has said the country will embark on several construction plans.

Over the weekend Rudd said the core challenging facing the government were several challenges regarding the aging population. As a result, he said “we need to grow the economy faster by boosting the productivity of our economy”.

“That is the only solution forward for Australia. In other words, producing more by making our workforce more productive.”

“How do we do that? You invest rapidly in infrastructure, in skills and education and training and you … take as much regulation out of the road of business so they can get out there and generate more growth…Easy to say, really hard to do.”

Credit card providers slammed

A number of credit card providers are acting unfair towards customers regarding interest payments on overdue or partly-paid balances, advocate agency Choice has said.

The agency released a study which showed the amount of interest charged depends on when the charges begin, and how “interest-free days” are calculated. The study said most companies backdate interest to the date of the purchase if a repayment is late, dramatically increasing payments.

“Many consumers would be surprised to learn they could have two cards with exactly the same interest rate and use them in the same way yet have one charging twice as much interest than the other if they pay late,” Choice spokesman Christopher Azine said in a statement.

“The tricks of the trade make it much harder to compare the relative merits of different credit cards because the headline interest rate is only part of the story.”

Renewable energy firm Energy Developments has requested shareholders reject a takeover bid from Pacific Equity Partners.

“The board continues to recommend that shareholders reject the cash offer of $2.75 per share as it represents inadequate value for ENE shares,” the company said in a statement.

Obama urges Congress to create deficit panel

Overseas, US President Barack Obama has requested Congress create a panel to examine ways to diminish the country’s deficit, which currently stands at $1.4 trillion.

Obama said the US is facing a “serious fiscal situation”, which was due to policies inherited from the Bush Administration. The statement comes after warnings from China regarding the deficit.

The statement comes ahead of a nervous week for investors on Wall Street. A number of earnings reports are due, and Ben Bernanke’s name is being put forward to the senate to determine whether he will chair the Federal Reserve for a second term.

Additionally, investors are eagerly awaiting a product announcement from tech giant Apple on Thursday, which is widely anticipated to be the company’s long-awaited tablet device.