The Australian share market finished in the negative, despite one of its largest listed businesses reporting a record six-month profit due to rising iron ore prices. Rio Tinto reported a $US12.3 billion half-year profit and would pay a dividend of $7.60 per share. Earnings in the US IT sector exceeded estimates, thanks to increased iPhone sales. Shares in Hong Kong and China fell as a result of greater regulation. On Wednesday, the ASX 200 finished 0.7% down. Rio Tinto announced its six-month earnings shortly before the Australian stock exchange closed for the day.
While Apple, Microsoft and Google have surpassed earnings estimates, ASX is stepping on Wall Street
There has also been rising demand and prices for materials such as aluminium and copper, which Rio Tinto also has major stakes in. Rio Tinto used its profit announcement to also indicate that it is pushing further into lithium, as demand for the mineral used in car and household batteries rises. It is committing $US2.4 billion for a project in Serbia. Travel hit hard by NSW lockdown extension. Local shares fell after US stocks retreated and as Sydney’s lockdown was extended by a month.
The mega miner’s profits show a net profit of $US12.3 billion ($16.7 billion) for the first six months of 2021, compared to just $US3.3 billion ($4.5 billion) in first half of 2020. Shareholders will receive a windfall payout of $7.60 per share, through a combination of an ordinary and a special dividend payment. Rio Tinto’s booming fortunes come as the price of iron ore globally soars, off the back of ongoing demand, mainly from China. Iron ore is Australia’s most lucrative export.
Major miners including BHP (-1.7pc), Rio Tinto (-0.2pc), and South32 (-3pc) were lower, as were the big four banks, led by CBA (-1.4pc). The worst performers of the session were Nickel Mines (-11.1pc), Netwealth Group (-6.7pc) and Redbubble (-6.7pc).”The economy has hit a major pothole before we’ve reached the vaccine finish line,” CBA’s head of Australian economics Gareth Aird wrote in a note. Mr Aird has forecast a “deep contraction” for Australians economy in the current quarter, tipping GDP to fall 2.7 per cent, before rebounding from November, and employment to fall by around 300,000 jobs in NSW. “Employment will decline significantly over the next few months because of the lockdown in Greater Sydney,” he said.
“Unemployment will rise more modestly than the fall in employment would suggest as the vast majority of people who are stood down in NSW will exit the labour force temporarily, as was the case last year.” At its meeting earlier this month, the Reserve Bank flagged that it would begin easing off its pandemic stimulus, by reducing its purchases of government bonds from $5 billion a week, to $4 billion for September. However, Mr Aird has now forecast the RBA to continue its bond-buying program at the current pace until February next year. Wall St down but tech giants exceed expectations The major US indices closed in the red, with the Dow Jones dropping a quarter of a per cent.
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