Official house price index rises 3.1% in June quarter: Economy roundup

The established house price index grew by a higher-than-expected 3.1% during the June quarter, according to the latest figures from the Australian Bureau of Statistics, with an annual increase of 18.4%.

The biggest increase was in Sydney, which was up 4.9% from the March to June quarters. Melbourne followed with a 3.6% increase, putting its annual growth rate at a massive 24.3%. Sydney’s annual growth was 21.4%.

More moderate growth was found in Adelaide, with an increase of 3.2% in the quarter leading to an annual gain of 11.6%, while Brisbane recorded a 0.3% increase over the quarter to just 8.5% annual growth.

The slowest quarterly growth was in Hobart, with just 0.1%, leading to annual growth of just 10.8%.

Meanwhile, other figures from the ABS reveal the trade surplus rose in June to a seasonally adjusted $3.54 billion.

That figure is an increase of $1.72 billion compared to the previous revised May estimate. Exports came to $26.68 billion, while imports totalled $23.14 billion.

More volatility in the retail sector emerged this morning, with adventure wear retailer Kathmandu shares falling over 12% to $1.47 after the company announced its pre-tax earnings will drop up to 7% below prospectus forecast during the 2009-10 financial year.

The company, which was floated late last year, said sales for the year ending 31 July 2010 were up 13.9% to $NZ245.5 million, with Australian sales up 14.3%.

However, earnings before interest and tax excluding one-off costs are expected to be $NZ47-48 million, about 5-7% below prospectus pro-forma forecast.

”Throughout the final four months of the financial year, in all three countries that Kathmandu trades in, the retail environment has been very challenging, and more difficult than we experienced in the first half of the 2010 financial year,” chief executive Peter Halkett said.

Elsewhere, the Australian Industry Group-Commonwealth Bank Australian Performance of Services Index has fallen 2.2 points to 46.6 in July, below the 50-point level separating expansion from contraction.

AIG chief executive Heather Ridout said the result was due to tight consumer spending.

“Both consumer-related services and business services fared poorly in July reinforcing the picture of a gradual and uneven recovery. Caution from consumers and businesses is preventing a more convincing and widespread recovery from taking hold.”

Gloucester Coal to purchase Noble interests

Gloucester Coal has agreed to buy major shareholder Noble Group’s interests in the Middlemount joint venture for $269.5 million, funded by a $410 million institutional equity raising.

The company will acquire a 27.52% interest in the venture, with a right to a further 2.48% interest from Macarthur Coal worth $8 million. It will also have the right to purchase another 20% interest for $100 million, which can be taken out within 18 months of the completion of the deal.

“The proposed Middlemount Acquisition from Noble marks a significant step forward in Gloucester’s strategy to become a major Australian, independent, diversified metallurgical coal producer,” Gloucester chief executive Barry Tudor said in a statement.

In the banking sector, AXA Asia Pacific Holdings has recorded a 19% drop in first-half profit, but still believes it is “well positioned” to deal with any regulatory changes in the industry.

The company recorded profit after tax and non-recurring items of $219.2 million in the six months to 30 June, down from $270.4 million in the same period in 2009.

“I am pleased with our performance set against the background of what has continued to be a difficult and uncertain external environment with the global markets down more than 10 per cent over the six-month period and the Australian dollar appreciating significantly,” AXA chief executive Andrew Penn said in a statement.

“As our performance demonstrates, despite the focus by others on the potential acquisition of our businesses by National Australia Bank and AXA SA, management’s focus has been and will continue to be on business as usual.”

Shares lower after poor Wall Street result

The Australian share market has opened lower this morning following a poor result on Wall Street, where investors have been delivered a hit in confidence due to poor economics and earnings data.

The benchmark S&P/ASX200 index was down 4.0 points or 0.1% to 4566.9 at 12.20 AEST, while the Australian dollar rose to a near one-week high at US91c.

NAB shares lost 0.3% to $25.09, while Commonwealth Bank shares fell 0.4% to $53.55. Westpac dropped 1.2% to $24.02 as AMP rose 0.6% to $5.4.

Paint manufacturer Wattyl has recorded an unaudited full-year net profit of $5.2 million, compared to a $1.5 million loss during the previous financial year.

The company said net profit before non-recurring items was $6.9 million, with EBIT at $14.9 million compared to $6.6 million in 2009.

“Profit after tax before non-recurring items was $6.9 million compared with $0.0 million for the prior year,” Wattyl said.

Mining giant Rio Tinto has said it plans to invest a further $864 million in order to expand the annual capacity of its Pilbara iron ore operation.

The expansion will include $US375 million spent on marine works, along with a further $US415 million for the procurement of items such as pile and marine structure.

Meanwhile, shares on Wall Street have fallen after the release of some disappointing consumer spending figures and Procter and Gamble recorded fairly weak financial results. The Dow Jones Industrial Average dropped 38 points or 0.36% to 10,636.38.