Gold Surge Lifts All Ords Despite Drag Form Weak Commodities

The Age

Wednesday May 19, 1993

TIM WINKLER

Soaring gold stocks overwhelmed flaccid commodities prices yesterday to push the all ordinaries index 4.7 points higher to 1682.6.

Overnight, 21 out of the 30 stocks that contribute to Wall Street's Dow Jones industrial average fell, pushing the average 5.54 points lower to 3444.39.

Growth in the Dow _ and hence also growth in the Australian market _ has been hampered for the past week, following the release of American consumer price index figures indicating a rise in inflation.

A 151.40 yen rise in Tokyo's Nikkei average, to 20,380.79 yen, helped support the gradual rise in Australian share prices yesterday.

However, at the Sydney Futures Exchange, the gap between the futures and physical markets widened by 1.4 points. June-series share price index contracts rose only 3.5 points _ leaving futures at a bearish 9.4 points to the physical.

Gold stocks shone again yesterday, pushing up the gold index 4.8 per cent, or 82 points, to 1798.3 _ its highest level since 3 March 1990.

Australia's largest gold producer, Western Mining, rose 12 cents to $5.36. Also starring were Central Norseman Gold, up seven cents, or 14.58 per cent, to 55 cents and Newcrest Mining, which rose 37 cents to $3.94.

General commodity prices remained weak, however. BHP, which has an increasing exposure to copper through the Escondida mine in Chile, has suffered from the slump in prices for the metal. Its shares fell 16 cents to $13.40 and one broker said that, at current prices, $12.50 would be a more reasonable price for the stock.

Among other resource stocks, CRA fell 18 cents to $12.70 while MIM was unchanged at $1.94.

An overnight dive in oil prices sent Santos six cents lower to $3.24 and Ampolex five cents to $4.70.

Brash Holdings fell 10 cents to $3.50. One broker said there were concerns the retailer would not be able to maintain its previous profit margins in the current economic climate.