Miners And Banks Give Investors Some Cheer

The Age

Saturday May 10, 2008

Vanessa Burrow

THERE were two forces at work on the Australian market that pointed towards a weekly rise: strong commodity prices; and a positive report from one of Australia's biggest banks.

The S&P/ASX 200 Index gained 48.6 points, or 0.9%, to 5771.8 points. And it recorded a weekly gain of 1.3%.

Oil kept inching its way forwards, hitting a record $US124.73 a barrel on the futures market. Gold continued its recovery, reaching a peak of $US888.50 an ounce - the highest in eight days.

And copper remains well above $US8000 a tonne, selling for a spot price of $US8435 a tonne on the London Metal Exchange.

ABN Amro Morgans director of strategy and chief economist Michael Knox said, by his calculations, copper was fair value.

"Not only is the commodity boom not over, the current low level of stocks suggests that there will be further sharp upside to commodities prices when the US economy recovers," he said.

It was commodity companies that helped the Deloitte Victorian Index rise 3.4%, outdoing all the global indices.

"Mining giants BHP and Rio Tinto climbed 6.6% and 7.3% respectively this week as global metal prices strengthened and as BHP used the surging oil price to talk up the profitability of its petroleum business in the takeover stoush with Rio," said Deloitte partner Grant Hyde. But the other big gains were recorded by National Australia Bank, which lifted its lending and deposits to manage a 25.8% rise in net profit, before extraordinary items.

Group chief executive John Stewart said it appeared the recent market turmoil had eased somewhat. But he was cautious about being too optimistic. "Just remember how jittery the market is and how event-driven the market is," he said.

NAB gained $1.24 to $32.24, ANZ was up 83? to $23, and Westpac rose 28? to $25.97. Paladin Energy was the best performer of the S&P/ASX 200 Index, rising 45?, or 9.2%, to $5.35.

But Westfield Group lost 28? to $17.50 and CSL was down 58? to $39.92 while wheat exporter AWB lost 6.4%, to close at $3.66.

Little-known iron ore explorer Maximus Resources more than doubled in value after announcing the discovery of a magnetite deposit of between 1.7 billion and 3 billion tonnes.

Its shares closed 15.5? higher, at 29? - the highest in about seven months. It was the South Australian company's biggest one-day gain since floating.

And the little-traded GTI Resources was up 4?, or 66.7%, to 10? on small volumes.

The dollar was buying a little more than US94? last night, having fallen on the release of the Reserve Bank's quarterly Statement on Monetary Policy.

© 2008 The Age

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