The S&P / ASX 200 Index (^AXJO) (XJO.AX) has closed higher, rising 0.3% to close at 4,900.8, after the Reserve Bank of Australia kept interest rates on hold. The two big miners and the four banks, which make up a large percentage of the index were all higher, while retailers were sold off.
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Billabong International (BBG.AX) saw its shares lose 49.5% of their value, dropping to 23 cents after the company came out of a trading halt. With no takeover deal materialising, despite months of discussions and a profit downgrade to boot, shareholders deserted the stock. Investors appear very concerned about the long-term viability of the company, with suggestions by some analysts that the company could sell off its assets and be wound up. Billabong is looking at asset sales, and confirmed that it had put its Canadian retail chain, West 49, up for sale.
Atlas Iron Limited (AGO.AX) gained 8.5% to close at 83 cents and Fortescue Metals Group (FMG.AX) rose 6.1% to $3.46. Overnight, the iron ore price managed to eke out a rise of US$1.50 to US$111.90 a tonne, following several days of falls. Those miners that are highly leveraged to the price of iron ore, including Fortescue and Atlas, benefitted from the positive news. Of course, should the iron ore price resume its downward trend, both companies could be in dire straits if iron ore prices end up below their production costs.
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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King owns shares in Billabong.