Australia Holds Rate at 4.75%; Metcash Net Up 6%

Marcus Jacob
07 Jun, 2011
New York City

Australian stocks declined for the sixth day and extended losses in the fourth week. The Reserve Bank of Australia left key rate at 4.75% and guided higher inflation in the next one year. Metcash annual net increased 6.1% but indicated a cautious outlook.

[R]4:30 PM Sydney – Australian stocks declined for the sixth day and extended losses in the fourth week. The Reserve Bank of Australia left key rate at 4.75% and guided higher inflation in the next one year. Metcash annual net increased 6.1% but indicated a cautious outlook.[/R]

The Reserve Bank of Australia left rates unchanged at 4.75% and guided that consumer price inflation will be ‘close to target’ over the next twelve months.

The accompanying statement released by the central bank did not clarify if rates are likely to be revised higher in the face of rising inflation.

The central bank is worried about the rising inflation and its impact on the non-resource linked sectors of the economy. However, the statement appears to indicate that the central bank is not ready to increase rates any time soon.

The ASX 200 index dropped 2.80 to 4,566.30 and All Ordinaries index fell 0.2% or 7.60 to 4,641.10.

Stock trading rebounded after falling for five days in a row to 2.1 billion shares worth $4.3 billion. Of the shares traded, 349 increased, 730 declined and 425 were unchanged.

The Australian Securities Exchange said average daily trading value declined by $1.7 billion in the last one year.

The Australian dollar increased a fraction to US$1.069 and crude oil price edged 29 cents lower to US$98.72 a barrel.

Stock Movers

Banks closed higher after the Reserve Bank of Australia left its key lending rate at 4.75%.

National Australian Bank increased 1 cent to $24.44, Commonwealth Bank increased 5 cents to $49.73 and ANZ gained 8 cents to $21.33. Westpac increased 17 cents to $21.52.

Resource stocks edged lower but pared earlier losses.

BHP Billiton fell 4 cents to $42.96 and Rio Tinto declined 6 cents to $79.29.

Woodside Petroleum decreased 54 cents to $45.05 and Santos Ltd declined a fraction.

The discount retailer Metcash increased 2 cents to $3.90 after it reported 6.1% increase in annual earnings to $241.40 million. Metcash declared dividend of 16 cents a share and said that more than 50% of consumer purchases at IGA supermarkets are items on sale.

The company also guided cautious outlook.