Swine flu outbreak spreads fast, Economy still battling, Shares gain ground: Economy roundup

Over 50 Australians have now been diagnosed with swine flu as the virus continues to spread across the country, with Victoria’s acting chief medical officer saying it could affect 20% of the state’s population.

Cases have been confirmed in travellers on a Qantas flight from Los Angeles and a Pacific Dawn cruise ship. Several cases have been confirmed in Victoria, where students at a school in the Melbourne suburb of Clifton Hill have been affected.

Victorian acting chief medical officer Rosemary Lester said at a press conference that 20% of the state’s population could potentially be hit by the flu. Worldwide, 13,000 people have been infected with the flu in 46 countries resulting in 92 deaths.

No deaths due to the flu have occurred in Australia.

Leading indicator shows recovery struggle

Meanwhile, the Australian economy is still suffering under the weight of the global financial crisis, results of a new survey show.

The Westpac-Melbourne Institute leading index of economy activity, which predicts the likely pace of economic activity three to nine months in the future, rose by just 0.3% in March.

The index is now down 5.1% over the entire year, and is still below the long-term trend of 2.8%. Westpac senior economist Matthew Hassan said in a statement that there has only been a slight improvement.

“That said, clearly the index is coming from an extremely weak starting point – the February read was the weakest read we’ve seen in the index since August 1982.

“The index remains deep in recession territory, implying a likely further contraction in activity through the middle of 2009.”

Shares higher

The Australian sharemarket has opened higher today with positive leads from Europe and Wall Street overnight. The benchmark S&P/ASX200 index was up 38.3 points or 1.01% to 3826.7 at 11.38 AEST.

The Australian dollar has also risen higher to US78.6 cents.

AMP shares rose 1.2% to $5.05 as Commonwealth Bank gained 0.5% to $35.65. Westpac lost 0.2% to $19.10 as NAB gained 1% to $21.86.

ANZ shares have been placed in a trading halt as it makes a non-binding proposal to the Royal Bank of Scotland for several of its Asian assets, looking to raise $2.5 billion in capital for the offer.  

“The scope, terms (including regulatory approvals), timetable and risk profile of any transaction – and whether a transaction will occur – remain unknown,” ANZ told the Australian Securities Exchange.

“This institutional placement and SPP raising will allow ANZ to fund an acquisition of selected RBS Asia asset. If such an acquisition were to proceed, ANZ’s Tier 1 capital ratio immediately afterwards would be above its target range of 7.5 per cent to 8 per cent.”

US confidence rises

Overseas, Wall Street posted positive results after news consumer confidence posted its biggest monthly rise in six years. The Dow Jones Industrial Average gained 196.17 points or 2.37% to 8473.49. Oil prices also reached a six-month high of $US62.

A private index of consumer confidence, recorded by industry group The Conference Board, shows a jump to 54.9 in May from 40.8 in April – the biggest monthly rise since April 2003.

The rise is due to more data that showed the number of Americans classifying jobs as “hard to get” falling from 46.6% to 44.7%.

“The moderation in the rate of decline in economic activity has raised hopes that an actual improvement will take hold in coming months,” Mark Vitner, senior economist at Wachovia told Reuters. “But there has been little tangible improvement so far. Conditions have merely been not as bad as they had been in previous months.”