Australia Lifts Rate to 4.25%

Darlington Musarurwa
06 Apr, 2010
New York City

Reserve Bank of Australia raised its key lending rate by 25 basis points to 4.25%. Australian job ads rise 1.8% in March. Peabody revised its offer of Macarthur Coal to A$3.6 billion.

[R]3:00 AM New York, 7:00 PM Sydney - Reserve Bank of Australia raised its key lending rate by 25 basis points to 4.25%. Australian job ads rise 1.8% in March. Peabody revised its offer of Macarthur Coal to A$3.6 billion.[/R]

The Australian stock index rose 0.9% lifted by commodity stocks as crude oil prices edged up to $86.60 a barrel.

Investors also cheered news that the country’s total job adverts rose in March pointing both to a rapid improvement in the country’s economy and strong labor demand.

In Sydney trading ASX 200 Index edged up 0.9% or 45.1 to 4,952.80.

Of the ASX 200 index stocks, 135 rose, 53 fell, and 12 were unchanged. Atlas Iron Ltd. led advancers in the index shares with a rise of 7.4% followed by Kingsgate Consolidated jumping 6.9%.

Other commodity stocks rose as well. Mincor Resources increased 4.5% to A$2.14 and Paladin Energy soared 4.3% to A$4.38.

The Australian dollar climbed 0.1% to 90.22 U.S. cents.

Australia Raises Its Key Rate to 4.25%

Reserve Bank of Australia reported today that it has elected to raise its cash rate by 25 basis points to 4.25% effective tomorrow as “growth is likely to be around trend and inflation close to target over the coming year.”

The central bank noted that inflation has expectedly declined in underlying terms from its peak in 2008 on slowing private-sector labor costs, a rise in the exchange rate and slower growth in demand.

“With the risk of serious economic contraction in Australia having passed some time ago, the Board has been lessening the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker,” said RBA.

Australian Job Adverts Rise 1.8% in March

The ANZ Job Advertisements Series shows the total number of jobs advertised in major metropolitan newspapers and on the internet grew by 1.8% to an average of 162,692 per week, providing the first annual growth since July 2008.

However, total job ads remain 41.6% below the all-time peak reached in April 2008.

Job advertisements in major metropolitan newspapers fell 1% in March after jumping 13.1% the previous month.

Newspaper job advertisements improved in March in Victoria, Queensland, Western Australia, Tasmania and the ACT, but fell elsewhere. All states except Queensland are now showing good growth relative to the same month of last year.

According to the report, the number of Internet job advertisements rose 2% in March after soaring 19.6% in February.

According to ANZ chief economist Warren Hogan job ads growth suggests that labour demand is strengthening in 2010 and confirms the rapid improvement in the economy over the last six months.

Peabody Raises Macarthur Coal Bid

Peabody Energy raised its bid for Macarthur Coal by 8% to A$14 a share from the initial bid last week.

The revised offer, which is no longer conditional on the support of the miner’s big shareholders and values the company at A$3.6 billion.

Macarthur Coal hasn’t responded to the bid yet.

Separately, the Australian reported that Noble Group has offered A$12.60 a share cash for the 12% of Gloucester Coal it doesn’t already own.

ASX Movers

Sigma Pharmaceuticals Limited led decliners in the S&P ASX 200 index with a loss of 8.8% followed by losses in Lihir Gold Limited of 5.4%, in Sundance Resources Limited of 3.3%, in Goodman Fielder Limited 2.7% and in Charter Hall Retail REIT 2.7%.

Atlas Iron Limited led gainers in the S&P ASX 200 index with a rise of 7.3% followed by gains in Kingsgate Consolidated Limited 6.9%, in Lynas Corporation Limited of 6.0% and in Western Areas NL of 5.4%.

Other Movers

BHP Billiton plc added 1.5% to A$44.65 after the mining company and Eskom have agreed on a new pricing path that will not be linked to commodity prices or foreign currencies.

PanAust Limited the gold and copper producer rose 2.9% to A$0.53.

Rio Tinto Limited advanced 1.2% to A$80.60 after the mining company Australia''s competition watchdog has extended the deadline for reviewing a proposed $116 billion iron ore joint venture by BHP Billiton plc and Rio Tinto Limited for a second time, to May 27, according to its Web site.

Mirabela Nickel Ltd the mineral explorer climbed 5.0% to A$2.72.

Newcrest Mining Limited gained 3.6% to A$34.99 after the gold producer said negotiations between the company and Lihir Gold commenced in February 2010, after the company submitted a conditional takeover offer.

Santos Ltd the transportation and marketing of hydrocarbons rose 1.2% to A$14.94.

Woodside Petroleum Ltd the oil and gas producer rose 1.7% to A$47.75.