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| Weekly Commentary Archive | | For archival copies of the Weekly Commentary click here... | | | | 7th May 2010 | A proposed new tax for miners, Greece’s sovereign debt issues, and weak markets in the United States put the skids under Australian stocks during the week.
The mining sector was particularly hard hit by the announcement of the Federal government's proposed 40 percent resource super profits tax.
However, key mining BHP Billiton and Rio Tinto were showing signs of bouncing back towards the end of the week, indicating the initial sell-off was an over-reaction. Likewise, the increasingly important Forestcue Metals rebounded strongly. The new tax, if adopted, will not be introduced until 2012.
Merger partners Lihir Gold and Newcrest both eased in line with a weaker gold price and on the proposed tax changes.
In banking, Westpac weakened despite reporting a 30 percent rise in first half earnings. Westpac said the outlook remained challenging. The other big banking stocks, NAB, ANZ and Commonwealth Bank, were also weaker.
The New Zealand share market, like most others around the world, was sharply weaker on the back of Greece’s ongoing sovereign debt woes and the spillover effect the crisis is having throughout the European Union.
A US$144 billion deal to bail out the beleaguered Greek economy was not seen as being sufficient to quell the crisis. The local market did not get much of a lead from Australia either, with that market reeling from news of a proposed new tax on mining stocks.
Market leader Fletcher Building was looking worse for wear, clocking up some double-digit falls during the week. Likewise Telecom was looking very soft ahead of its interim result due out today.
Shares in Australasian outdoor equipment chain Kathmandu remained under downward pressure, but the company is sticking to its net profit forecast for 2009-10 of $30.9 million. KMD said however that conditions remained difficult.
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