Rio Tinto shares fall on Chinese spying accusations, Housing finance rises: Economy Roundup

Rio Tinto shares have fallen 1.5% to $59.65 this morning after China accused the company of spying on Chinese corporations for about six years, costing its steel mills $122 billion.

The State Secrets Bureau has said the company has cost China’s state-owned steel mills about $122 billion in higher charges as a result of the alleged spying. The accusations come as the Bureau has reportedly completed the allegations against Australian worker Stern Hu and three colleagues, who were arrested last month on suspicion of espionage.

Rio Tinto has previously said that any claims of espionage in relation to its iron ore prices are “wholly without foundation”.

Macquarie Private Wealth private client adviser Helen Spencer told AAP that investors need to watch how the market reacts to the news.

“The market has really been looking through it and is much more focussed on the fundamentals and the commodity pricing rather than anything else,” Spencer said

Meanwhile, new housing finance figures from the Australian Bureau of Statistics show the number of finance commitments for owner-occupied housing rose by 1.1% during June, following a 2.2% increase in May.

The number of commitments for the construction of dwellings grew by a seasonally adjusted 2.8%, but the actual number of new dwelling purchases declined by 0.2%. Purchases of established dwellings increased by 1%.

Meanwhile, the value of total dwelling commitments rose by a seasonally adjusted 0.3% to $23 million, while value of owner occupied housing dwelling commitments also increased by 1% to $17 million. The value of investment housing – fixed loans decreased by 1.8% to $5.8 million.

Shares open higher on positive US jobs data

The Australian share market has opened higher today after data from the US last week showed the unemployment rate actually declined, boosting in confidence in both overseas and local markets.

The benchmark S&P/ASX200 index was up 44.8 points or 1.04% to 4344.2 at 11.55 AEST. The Australian dollar fell after the news from the US, moving to US83c.

NAB shares rose 0.8% to $25.70, while ANZ gained 0.8% to $19.54. Westpac gained 0.4% to $22.91 as Commonwealth Bank rose 0.6% to $44.70.

The confidence comes as the US Labor Department said last week that only 247,000 jobs were cut in July, less than the 320,000 expected. The unemployment rate has dropped to just 9.4% from 9.5% during June, while the Institute for Supply Management said its index of national factory activity rose to a 12-month high.

Fairfax Media may introduce paid content to its online services, after News Corporation last week announced a similar venture.

“Monetisation will have to happen, because without monetisation of the online sites that the newspaper industries have operated very successfully, we can’t afford to keep the big newsroom staffs we have,” chief executive Brian McCarthy told Business Spectator.

Bendigo cash earnings fall

Bendigo and Adelaide Bank has recorded a 24% decline in earnings, but maintains its credit quality is well placed as it embarks on a $300 million capital raising.

The bank blamed the harsh economic conditions for the drop in revenue, and higher funding costs. The lender reported cash earnings of $182.2 million for the 2008-09 year, while net profit fell by 57.7% to $83.8 million.

The bank said the reduced profit was due to a slowing economy and global recession, an unprecedented drop in Australia’s official cash rate, and higher funding costs.

“Going forward, and particularly after the fully underwritten capital raising announced today, we have the flexibility and capacity to take advantage of emerging market opportunities,” Bendigo and Adelaide Bank Group managing director Mike Hirst told Reuters.

“In Bendigo and Adelaide Bank, I see an organisation with a sound credit quality, a balance sheet with a low level of risk, and a high quality capital base. This places us in an ideal position to grow our businesses in a sustainable way, while continuing to meet and exceed the expectations of our customers and creating real wealth for our shareholders.”

The bank’s shares have been placed in a trading halt until no later than 12 August, with its shares last trading at $8.13.

“The trading halt is necessary for Bendigo to make an announcement to the market in relation to a capital raising involving retail and institutional investors,” the company told the ASX.