Inflation gauge rises 0.3% during November, Shares rebound from Dubai debt worries: Economy Roundup

Inflation rose by 0.3% during November following a gain of the same amount during October, the TD Securities-Melbourne Institute monthly inflation gauge has revealed.

The update to the index now shows a 2.1% increase in the 12 months to November, within the Reserve Bank of Australia’s 2-3% target band – giving it reason to raise rates tomorrow, TD Securities strategist Annette Beacher said.

“Annual inflation was comfortably below the RBA’s 2-3% target band for the last six months,” she said in a statement. “However, there are now early signs that such price deceleration has bottomed out.”

“Indeed, rent has picked up for the first time in nine months, and our trimmed inflation measure has increased after two consecutive months in decline.

Beacher said the company believes the RBA will lift the official interest rate by 25 basis points tomorrow.

Meanwhile, company gross operating profits fell by a seasonally adjusted 2.1% during the September quarter, new figures from the Australian Bureau of Statistics have revealed.

Inventories rose by a seasonally adjusted 0.8% during the quarter, with manufacturing sales of goods and services also gaining 1.2%. Wholesale trade’s sales of goods and services rose by 0.9%, while wages and salaries remained “relatively unchanged”.

Shares higher after Dubai debt worries

The Australian sharemarket has opened 1.5% higher after a shocking end to the week on Friday, when markets fell nearly 3% due to fears over Dubai’s status as an investment haven.

The benchmark S&P/ASX200 index was up 112 points or 2.47% to 4685 at 12.10 AEST, while the Australian dollar increased to US91c after markets began to stabilise.

Commonwealth Bank shares increased 3.2% to $52.22, while Westpac shares also gained 3.7% to $23.98. NAB shares rose 4.2% to $28.14, while ANZ gained 3.4% to $21.90.

Department store David Jones has said it is ready for further growth and is positioned to increase profits during the next holiday season.

Chairman Robert Savage has said at the company’s annual general meeting that while the year has been challenging for the company, previous restructuring work has allowed the company to survive.

“Importantly, we have not only focused on the immediate short-term outlook, but also invested considerable time and effort into implementing the longer-term projects that will start delivering growth and additional returns to shareholders from 2010 onwards,” he said.

Insurance group AIG is embarking on a rebranding exercise throughout Australia and New Zealand, and will know by known as “Chartis”.

“A company’s brand and the associated image and public perception that come with it are hugely important factors for any business,” chief executive Chris Townsend said in a statement. “This is something that we have been acutely aware of, given the well publicised challenges our parent company has faced in the past 15 months,” Mr Townsend said.

“In addition to giving us our own identity, the new brand reinforces our commitment to the market and signifies our autonomy, with the ongoing protection provided by our financial strength.”

ConnectEast to pay early completion bonus

ConnectEast will pay Thiess John Holland $55 million under an agreement for early completion of the EastLink toll road.

“As of June 30, 2009, a provision of $40.5 million was included in ConnectEast’s balance sheet in respect of the bonus. Based on the amended formula and current projections, it is expected that the provision will be adjusted to $55 million as at 31 December 2009,” ConnectEast said in a statement to the ASX.

OZ Minerals has now signed an agreement with IMX Resources to explore its copper-gold tenements in SA, and will additionally acquire 13% of the company through a $10 million share placement.

“OZ Minerals considers the area surrounding the Prominent Hill copper-gold mine to be prospective for the discovery of similar types of deposits and as such, the tenements surrounding Prominent Hill are a high exploration priority,” the company said.

“The joint venture will allow exploration on the IMX tenements to be expedited, for the benefit of both OZ Minerals and IMX shareholders,” managing director and chief executive Terry Burgess said in a statement.

Telstra undergoes corporate restructure

Telecommunications giant Telstra will now undertake a major organisational restructure with the creation of a new international unit and two new product units, the company has announced.

The restructure will see the creation of four groups, customer-facing units, product units, operations unit and a corporate support unit. Chief executive David Thodey said in a statement the restructure will see the company expand its reach in the domestic and international market.

“Today I am taking another step to organise Telstra around our core strategy: to compete in the fastest-growing markets in Australia and overseas, lead the industry by investing in new products and services, and deliver a better experience for our valued customers,” he said.

Meanwhile, in the US investors continue to be nervous regarding Dubai’s debt issues. The stock market is set for a tumultuous week, with Black Friday sales results expected to be released along with official jobs data.

“A big part of whether the market’s positive trend continues for the next month will partly depend on whether this Dubai World problem does, in fact, mushroom into concerns about the soundness of financial markets,” Michael James, senior trader at Wedbush Morgan, told Reuters.

“At least so far here in the US market, that seems to be shrugged off, but we’ll see if we get any more details… that might put a more cautionary spin to the early problems.”