Aussie floods push price of coal for steelmaking toward new record
Local officials are saying that the floods in the northern Australian state of Queensland have reached “biblical proportions.” The floods, a result of the wettest spring on record, have struck an area bigger than France and Germany combined. Flooding from six rivers in the area has forced the evacuation of tens of thousands of people.
The flooding is hitting coal mines too. “Some open-cut pits are now looking more like dams than mines,” Michael Roche, head of the Queensland Resources Council, told Bloomberg. With railroads under water there wouldn’t be any way to get the coal to ships for transport to markets in Asia even if companies could get it out of the ground.
Which is a big deal for Asia’s steelmakers. Read more
Buy Westpac Banking (WBK)
They have banks in Australia too.
And a stronger economy and an appreciating currency against the U.S. dollar.
And no government constraints on raising dividends if a bank wants to signal its confidence in the future.
I’m going to use the weakness in Australian stocks over the last few days—when China sniffles, Australia’s stocks take to their sick beds—to buy one for my Jubak’s Picks Portfolio.
On November 2 Westpac Banking, (WBK) reported earnings for the 2010 fiscal year that ended on September 30. The company, one of Australia’s big four banks, raised its final dividend for the year to A$.74 from an expected A$.70 to bring its payout for the year to A$1.39 a share, a 20% increase for the fiscal year. (In the U.S. the stock trades as an ADR with one ADR equal to five Australian shares.)
And why not? Read more
Interest rates could stay low for longer than anyone now projects
The Reserve Bank of Australia, the country’s central bank, surprised just about everybody by keeping its benchmark interest rate unchanged today, February 2.
All 20 economists surveyed by Bloomberg had predicted a quarter-percentage-point increase to 4%. Futures markets rated odds of an increase at 74%.
Why do you care if you don’t live in Australia or own much in the way of Australian stock and bonds? Read more
The Australian dollar sets off a global rally
Who’d a thunk it?
The Austalian central bank raises interest rates by 0.25 percentage points and the result is a global rally in everything from gold to commodities to stocks.
Australia’s economy–2008 GDP $1 trillion–isn’t big enough to drag the global economy anywhere. But the rate increase to 3.25% came as a surprise. And the country is the first of the G20 economies to raise interest rates. This interest rate increase is the first by any major central bank since the financial crisis took hold.
Investors around the world took the increase as a sign that Australia’s economy has come back strong–central banks worried about recession don’t raise interest rates–and that the rest of the world won’t be far behind. Read more
