Australia Stocks Near Five-Year Low on Global Recession Outlook

By Shani Raja

Nov. 21 (Bloomberg) -- Australian stocks plunged, sending the benchmark index near a five-year low, as global markets slumped after reports showed the U.S. economy is worsening.

BHP Billiton Ltd. fell 3.9 percent, extending its loss this week to 23 percent, after metals prices in London sank to their lowest since July 2005. Woodside Petroleum Ltd. plunged 8.3 percent as crude fell below $49 a barrel for the first time since May 2005. Macquarie Group Ltd. dipped 2.2 percent.

“Markets are progressively pricing in a deeper and more prolonged recession,” said Prasad Patkar, who helps manage about A$1.3 billion ($800 million) at Platypus Asset Management in Sydney. “A depression is too ugly to contemplate. It’s an ultra-low probability, but not zero probability.”

The benchmark S&P/ASX 200 Index dropped 3.7 percent to 3,227.70 at 12:31 p.m. in Sydney, the lowest since Dec. 18, 2003. The index has fallen 53 percent from the record set on Nov. 1, 2007, in the wake of the global credit crunch.

U.S. jobless claims approached the highest level since 1982, an index of leading economic indicators fell for a third time in four months, and the Federal Reserve said manufacturing in the Philadelphia area shrank at the fastest pace in 18 years.

A measure of six metals traded on the London Metal Exchange slumped 3.5 percent, with copper declining 3.1 percent and nickel 2.9 percent. Crude oil fell in New York as a recession in the U.S., Europe and Japan weighs on global energy demand.

BHP, Woodside

BHP, the world’s largest mining company, fell 3.9 percent to A$20.27. Woodside, the nation’s No. 2 oil producer, slumped 8.3 percent to A$28.10. Macquarie Group, Australia’s largest securities company, dropped 2.2 percent to A$26.40.

The S&P 500 fell to its lowest level in 11 years and extended its plunge from an October 2007 record to almost 52 percent in the worst bear market since the Great Depression. JPMorgan Chase & Co. tumbled 18 percent and Citigroup Inc. plunged 26 percent as concern the recession will trigger more bankruptcies pushed the cost of insurance against corporate defaults to an all-time high.

Fortescue Metals Group Ltd., Australia’s third-largest iron ore exporter, was among the day’s biggest gainers. It surged 9.7 percent to A$1.42, the most since Oct. 14, after reporting a new sales agreement and a quarterly “trading profit” of A$360 million ($219 million).

The following companies also rose or fell on the Australian stock exchange today.

Babcock & Brown Infrastructure Group (BBI AU), the owner of Australia’s second-biggest coal-export harbor, tumbled for the sixth straight day. The shares fell 0.7 cent, or 21 percent, to 2.7 cents, a record low.

It followed a 28 percent slide yesterday after Moody’s Investors Service Inc. downgraded the company’s corporate-family rating to Ba2 from Ba1, and senior-secured rating to Ba3 from Ba2, citing a growing “liquidity risk.”

Monadelphous Group Ltd. (MND AU), a mining services company, added 49 cents, or 8.4 percent, to A$6.32. The company yesterday said it plans to buy back as many as 2 million shares over the next 12 months.

Boart Longyear Ltd. (BLY AU), a provider of drilling services to mining companies including BHP Billiton Ltd., rose 2 cents, or 13 percent, to 22 cents, the most since March 6. IOOF Holdings Ltd., an Australian financial services firm, became a substantial holder in the company on Nov. 18, according to a statement today.

Nexus Energy Ltd. (NXS AU), operator of the proposed Crux natural gas liquids project, tumbled 8 cents, or 20 percent, to 33 cents, the lowest since June 29, 2005. Nexus said it scrapped an agreement with Vanguard Oil & Gas International Ltd. and Viking Shipping Ltd. for the supply of an oil production ship.

Sims Group Ltd. (SGM AU), the world’s biggest recycler of scrap metal, dropped A$1.20, or 9.8 percent, to A$11, the lowest since June 17, 2004. The company said some consumers have stopped buying and this will hurt its short-term financial performance.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net