June 2 – IAG slumps on profit warning

Shares in the Australian Insurance Group fell as much as 10.8 per cent in a single day, following a company warning that it was cutting its full-year insurance margin due to issues with its U.K. motor insurance business.

June 7 – Employers confident as job ads rise

A survey shows that Australian job ads in newspapers and online increased 4.3 per cent in May compared to April numbers. The average number of ads per week was more than 165,000. The data suggests employers remain confident about the economy’s long-term prospects despite the tightening of monetary policy in the first half of the year and renewed concerns about global environment,” said Katie Dean, a senior economist with the Australia and New Zealand Banking Ground (ANZ).

June 8 – Apple’s Steve Jobs unveils iPhone 4 with video chat

Apple founder Steve Jobs has unveiled his company’s latest smartphone, the now thinner version known as the iPhone 4. The new smartphone includes a front-facing camera that allows for video calling when connected to a Wi-Fi network. The device also has a stronger battery than its predecessor. The iPhone releases in five countries, including the United States, on June 24. Two versions are available: a 16 gigabyte version that will retail for US$199, as well as a 32 gigabyte model with a US$299 cost. The smartphone also includes an upgraded operating system that allows for more than one application to run simultaneously. The iPhone has become the primary driver of April profit growths since its June 2007 launch.

“When you hold it in your hands, it’s it’s unbelievable,” said Jobs. The recently launched iPad, according to Jobs, has sold more than 2 million iPad tablets world-wide since its launch, making it the company’s fastest-selling new product and a potential leg of new growth for the Apple.

June 8 – Business confidence slips for third straight month

Battered by rising interest rates, a tumbling Australian dollar, and renewed global financial market volatility, with debt woes in Europe casting a cloud over the global growth outlook, Australian business confidence fell for a third straight month. Data suggests the economy’s pace of expansion could be slowing. The Reserve Bank of Australia (RBA) decided to put interest rates on hold, saying policy settings are appropriate for the near term. The RBA has raised interest rates six times since October 2009, taking the cash rate target to 4.5 per cent from three per cent.

June 14 – ANZ Bank looks to multinational business for growth

ANZ Bank is aiming to ride the China boom and double its northeast Asian revenue from $US667M over the next few years as its institutional business targets multinationals and China’s state-owned enterprises. ANZ has four branches and two sub-branches in China, but it wants to expand to 20 outlets by 2013 and obtain a license to operate with Chinese currency.

June 19 – Resurgent Australian dollar heading for US90 cents

The Australian dollar is projected to break through US90 cents by year end, after rising about US87 cents for the first time in a month. It has risen about seven per cent since the end of last month, but is still far off the year high of US93.82, on April 12. The dollar fell to US80.65 cents on May 25, a year-to-date low.

June 19 – Economist predicts 25-year boom for Australia

A leading economist forecast this month a 25-year boom for the Australian economy, but warned against complacency over China’s demand for minerals. Richard Gibbs, global head of economics at Macquarie Securities, predicted that unemployment in Western Australia could dip as low as three per cent as Australia becomes one of the world’s most dynamic economies.

Gibbs said the global financial crisis was accelerating the shift of the global balance of economic power to Asia and creating fabulous opportunities for well-diversified, low-debt, link economies such as Australia’s.

“The 30-year period we are entering now is going to produce enormous potential for Australian companies to lock in to,” said Gibbs.

Gibbs said the way Australian business went about building relationships in Asia would determine how well the country did in the years ahead. He said there was a consumer revolution occurring in China, with many factories being retooled for domestic consumption following the collapse of consumer confidence in the U.S. and Europe.

“We should recognize we are in the right part of the world to forge relationships, but the question is how we build and manage those relationships,” added Gibbs.

June 28 – Reports indica te home-building recovery to stall in 2011

The Housing Industry Association (HIA), which represents home-builders, said housing starts are likely to fall three per cent in 2011, reversing part of the expected 20 per cent rise in 2010.

Data shows that the industry will continue to build homes at a rate far below demand. In its quarterly National Outlook Report, the HIA said Australia needed to build more than 190,000 dwellings in 2010 alone to meet underlying demand. Current estimates fall 35,000 short of that number. Harley Dale, the chief economist at HIA, said that over the next 10 years, Australia would need to build 420,000 dwellings more than what has been built over the last decade.

“A failure to build sufficient homes is placing huge pressure on rental markets and is making it very difficult for younger Australians who aspire to home-ownership to achieve that goal,” said Dale.

Empirical data, observations on the ground, and the slow progress in reducing supply-side obstacles all currently point to the first increase in housing starts in eight years in 2010, which would revert back to a decline in starts in 2011. But activity in the housing-renovations sector is set to remain at high levels due to strong job-market conditions and ongoing increase in house prices. HIA expects the total worth of the renovations sector increased by seven per cent in 2009-10. Growth of four per cent was forecast in each of the subsequent two years, taking renovations activity to a worth of $36.4 billion in 2011-12.

June 29 – BP denies Moscow report that Hayward will quit

Tension between BP and the Kremlin has increased after the oil giant denied reports its chief executive was quitting. Just hours before Tony Hayward was to meet Igor Sechin in Moscow for talks aimed at restoring confidence that BP remains financially viable despite its Gulf of Mexico spill, three news agencies reported that Sechin had told reporters that Hayward is “leaving his position and he will introduce his successor.”

The remarks were swiftly denied by BP. A spokeswoman said Hayward will remain chief executive and had “no intention” of resigning from his post. A spokesman for Sechin said management changes were not discussed when he met Hayward and added that BP was committed to a strategic partnership with Russia on various projects. The exchange came as oil washed ashore in mainland Mississippi for the first time since April 20. There were also mounting worries that Tropical Storm Alex, which is gathering strength in the Gulf of Mexico, could disrupt BP’s cleanup efforts.

June 30 – Qantas premium market improving

Qantas Airways said today that passenger numbers in May increased 5.6 per cent on a year ago, but its yields remained under pressure. Qantas said its revenue seat factor, a measure of how many seats it fills across its fleet during the month, declined by 2.7 points on-year to 75 per cent. Excluding foreign exchange impacts, Qantas said yields across its mainline, discount Jetstar and regional carriers for the 11 months to May, were down 3.4 per cent on domestic flights and 12.2 per cent on international flights compared to last year. The carrier said “increased competition continues in the low-fare aviation market,” while the premium market, including business travel continued to improve. Smaller rival Virgin Blue said today that passenger numbers across its domestic and international networks rose 4.6 per cent from last May, while its revenue load factor remained steady at 72.4 per cent.

The airline group said that an 18 per cent increase in its flying capacity was matched by an 18 per cent lift in demand as its fledgling long-haul airline V Australia helped international demand increase by 60 per cent.

July 2 – Economists say budget surplus still ac hievable by 2013

The Gillard government is still expected to deliver a budget surplus by 2013, despite dramatically restructuring its mining tax. The government’s changes revealed today by Prime Minister Julia Gillard, headlined by the 40 per cent tax rate being cut to 30, will surely cost the budget up to $1.5 billion in lower forecast revenue. However, economists’ initial estimations today showed the move to reduce the corporate tax from 30 to 29 per cent, compared to the planned 28 per cent, would cover the revenue shortfall. Citi chief economist Paul Brennan said, based on current projections, the budget surplus by 2013 should still be achievable.

“The revenue gap of $1.5 billion will be made up by only cutting the company tax rate to 29 per cent and not proceeding with the resource exploration rebate. The new tax regime for resources does not begin until 2012 and where commodity prices are will be at the time is obviously highly uncertain given the risks facing global growth.”

July 5 – Banks under pressure to raise interest rates independent of RBA hikes

Deteriorating funding conditions for Australia’s banks will likely prompt rate hikes independent of any Reserve Bank of Australia (RBA) move, a senior banker says. Bank of Queensland Chief Operating Officer Ram Kangatharan said tougher funding conditions were putting pressure on bank margins. The cost of wholesale borrowing for banks has come under renewed scrutiny after Westpac last week issued new five-year debt at a risk premium higher than some expected, highlighting fresh strains in the market on the back of Europe’s debt crisis.

“On the wholesale side, things are getting tougher,” said Kangatharan. Competition for retail deposits remains fierce, with the only growth in this sector solely driven by “hot money” chasing special offers. “Sustainable retail deposit growth is pretty tough in this environment,” said Kangatharan. “All of the banks are starting to feel the pinch [in terms of deposit margins].”