Australian Rates on Hold, Retail Sales Rise 0.4%

Marcus Jacob
01 Mar, 2011
New York City

Australian stocks and dollar closed nearly unchanged after the Reserve Bank of Australia left rates on hold and cited rising wage pressures. Current account deficit in the quarter to December widened to $7.3 billion and retail sales in January rose 0.4%.

[R]4:30 PM Sydney – Australian stocks and dollar closed nearly unchanged after the Reserve Bank of Australia left rates on hold and cited rising wage pressures. Current account deficit in the quarter to December widened to $7.3 billion and retail sales in January rose 0.4%.[/R]

The Reserve Bank of Australia left its key rate on hold and cautioned that labor markets are firming up and wage pressures are building in the economy.

However, the central bank indicated that rates are likely to remain unchanged for next several months and national income has been growing “strongly” driven by the strongest terms of trade in six decades.

Separately, January retail sales rose 0.4% from December to $20.44 billion. According to the data released by the Australian Bureau of Statistics, retail sales were unaffected by floods and a cyclone in Queensland.

Sales at department stores rose but food sales were strong and household goods sales were weaker than a month ago.

The ASX 200 index declined 5.30 to 4,826.46 and the All Ordinaries index fell 3.2 to close at 4,920.40.

Australian dollar edged lower to close at US$1.016 and crude oil futures increased $1.21 to close $97.68 a barrel.

Seasonally adjusted current account deficit widened in the fourth quarter to December 2010 to $7.3 billion from $7.1 billion in the third quarter ending in September.

Stock Movers

Banks declined in trading as well but on a weaker than average volume. Westpac decreased 26 cents to $23.27 and Commonwealth decreased 7 cents to $53.04. ANZ declined 11 cents to $24.02.

Retailers closed mixed. David Jones increased 1 cent to 44.60 cents, Myer increased 2 cents to $3.30 and Harvey Norman decreased 1 cent to close at $3.02.

Resource stocks closed higher. BHP Billiton increased 26 cents to $46.35 and Rio Tinto gained 38 cents to $85.31.

Energy stocks declined. Santos decreased 21 cents to close at $14.13 and Woodside Petroleum eased 1 cent to $42.57.