Shares gain ground, Turnbull threatens to block private health rebate cuts: Economy roundup

The Australian sharemarket opened 1.8% higher this morning after positive leads from Wall Street overnight, where technology firms helped buoy the market.   

The benchmark S&P/ASX200 index was up 56.1 points or 1.5% to 3779.5 at 12.10 AEST. The dollar also regained yesterday’s lost ground, trading at US76 cents.

Westpac shares lifted 1.5% to $20.51, with NAB following by 1.2% to $21.44. Woolworths gained 1.2% to $25.78 while ANZ lost 0.1% to $15.35.

Stockland shares have dropped a massive 14% to $2.88 after the company said its institutional capital raising, which was originally designed to raise $1.56 billion, was oversubscribed.

“The institutional placement and institutional entitlement offer were heavily oversubscribed with demand from both new and existing Australian and international institutional investors,” Stockland said in a statement.

“This means that in total Stockland will raise $1.98 billion.”

Federal Opposition Leader Malcolm Turnbull has also made waves by suggesting the Coalition will block the Government’s plans to cut the private health insurance rebate.

But Turnbull has offered an alternative, saying the Government should pass legislation increasing tobacco taxes by 12.5%. “Tobacco is the single most preventable cause of ill health and death in Australia,” Turnbull said.

The Government said it will respond to Turnbull’s proposal when the Treasury chief Ken Henry’s tax review is delivered.

Overseas, Wall Street gained on the back of technology companies. Novellus, a company which provides equipment to semi-conductor manufacturers, received a re-rating from Bank of America. The Dow Jones Industrial Average gained 46.43 points or 0.56% to 8331.32.

The US Government also announced it will introduce new measures under its $US75 billion home foreclosure prevention plan. Under the changes, lenders will receive help even if their borrowers default on their mortgages. 

Also in the US, regulators have approved Rio Tinto and Chinalco’s proposed $25.6 billion merger plans, while Rio Tinto calmed investors’ fears and said it was committed to the deal.

“Rio Tinto and Chinalco announced today that they have obtained clearance from the Committee on Foreign Investment in the United States regarding the proposed issue of convertible bonds to Chinalco and the indirect minority investment in Kennecott Utah Copper Corporation,” Rio Tinto said in a statement.

“Rio Tinto and Chinalco jointly filed a voluntary notice with CFIUS in connection with the transaction. The receipt of CFIUS clearance satisfies a regulatory pre-condition to the transaction.”