Australia Holds Interest Rate at 4.5%

Mayank Mehta, Chandrasekhar Atreya and Darlington Musarurwa
01 Jun, 2010
New York City

RBA holds its benchmark interest rate at 4.5%. National Australia Bank Ltd announces extension to AXA Asia Pacific Holdings Ltd framework deed. Transurban Group announces holding interest of BlackRock Group. Rio Tinto claims government mining tax ads are misleading.

[R]6:00 PM Sydney, Australia – RBA holds its benchmark interest rate at 4.5%. National Australia Bank Ltd announces extension to AXA Asia Pacific Holdings Ltd framework deed. Transurban Group announces holding interest of BlackRock Group. Rio Tinto claims government mining tax ads are misleading.[/R]

ASX 200 index in Australia decreased 0.61% or 26.80 to 4,402.90 and of the stocks in S&P ASX 200 index, 69 increased, 119 declined and 12 were unchanged.

The Australian dollar remained unchanged after the RBA held its benchmark interest rate at 4.5%. The dollar traded at 83.67 US cents at 2:35 p.m. in Sydney from 83.68 cents just before the announcement. The two-year government bond yield also remained unchanged at 4.37%.

The policy setting board with its governor Glenn Stevens kept the overnight cash rate target at 4.5%, the Reserve Bank of Australia said in a statement in Sydney today.

National Australia Bank Ltd, the country’s biggest business lender gained time till July 15 to overcome regulatory opposition to its proposed takeover bid of Axa Asia Pacific Holdings Ltd for A$13.3 billion.

The regulatory authority had blocked the deal in April as they felt that the competition would be hurt if NAB had control of the North investment platform of Axa. NAB and Paris-based AXA SA will extend their agreement to buy Axa Asia Pacific until July 15 and any of the three can end the agreement if the deal remains blocked after that date, said National Australia Bank Ltd.

A survey released by The Australian Industry Group and PricewaterhouseCoopers in Canberra today, shows that the performance of manufacturing index declined by 3.5 points to 56.3 from April indicating that manufacturing growth slowed in May.

The survey also showed that inventories fell by 8.8 points to 52.1 and new orders slipped by 4.9 points to 54.6.

Australian government will go ahead with resource tax proposal in its present form. “The government is absolutely determined to proceed with the tax within the framework that I outlined on May 2,” Treasurer Wayne Swann told Australian Broadcasting Corp radio today.

A$38.5 million campaign over radio, print and television, authorized under the emergency powers of the government started on May 26 urging Australian public to support the tax proposal to boost the economy.

Qantas Airways Ltd will test the appeal of Apple’s iPad tablet computers through it budget carrier Jetstar in its inflight entertainment later in this month. While internet browsing will be disabled as per the policies of the airlines, passengers will be charged A$10 to use iPads for movies, books, games and TV programs, said Spokeswoman Andrea Wait of Melbourne-based Jetstar.

The iPad has a 9.7 inch touch-screen display that allows users read books, view videos and play games.

ASX Movers

St Barbara Limited led gainers in the S&P ASX 200 index with a rise of 4.9% followed by AWB Limited 4.0%, APA Group 4.0% and Map Group 4.0%.

Downer EDI Limited led decliners in the S&P ASX 200 index with a loss of 25.0% followed by Gunns Limited 9.3%, PaperlinX Limited 5.1%, Virgin Blue Holdings Limited 4.5% and Mirvac Group 4.2%.

Other Movers

BHP Billiton plc fell 0.5% to A$38.05 after the mining company confirmed Berth 2 at its Hay Point coal port operations will be shut to complete planned maintenance work.

National Australia Bank Limited fell 1.8% to A$24.18 after AXA Asia Pacific Holdings Limited and AXA SA announced that they have agreed to extend the terms of the Framework Deed between them relating to the acquisition of AXA APH by National Australia Bank till July 15.

Rio Tinto Limited dropped 0.2% to A$66.99 after the mining giant accused the Rudd government of using misleading information in new taxpayer-funded advertisements that have been controversially exempted from the government''s own guidelines.

Starpharma Holdings Limited closed unchanged at A$0.54.

Transurban Group rose 0.9% to A$4.33 after the company announced that BlackRock Group is interested in 66,995,687 shares of the company, representing 5.16% of the total voting power.