Australian Rates on Hold; Buildings Approval Falls 3.5%

Marcus Jacob
02 Aug, 2011
New York City

Australian stocks closed lower after the Reserve Bank of Australia left its key lending rate on hold for the tenth month to 4.75% and cited that measures that affect long term inflation are on the rise. Building approvals declined 3.5% in June.

[R]4:30 PM Sydney – Australian stocks closed lower after the Reserve Bank of Australia left its key lending rate on hold for the tenth month to 4.75% and cited that measures that affect long term inflation are on the rise. Building approvals declined 3.5% in June.[/R]

Australian stocks edged lower after Reserve Bank of Australia left its key lending rate on hold. The central bank also raised the uncertainty in the U.S. and Europe but also worried of the rising inflation.

The 4.75% rate is on hold for the 10th month in a row.

The ASX 200 index decreased 64.20 or 1.4% to 4,433.60 and All Ordinaries index fell 1.4% or 62.80 to 4,510.30.

In trading, turnover decreased to 1.87 billion shares worth $4.7 billion and 352 shares increased, 706 decreased and 356 were unchanged.

The Australian dollar decreased to US$1.086 after the Reserve Bank of Australia left its key lending rate on hold.

The central bank in the statement released after the rate setting meeting noted that the board “is concerned about the medium-term outlook for inflation.”

In the statement the RBA Governor Glenn Stevens noted that the food prices will begin to fall in few months but other measures that lift inflation in the long term are on the rise.

The Australian Bureau of Statistics said that the number of building approvals declined 3.5% in June from May, the third monthly decline in a row. The weighted average price in metropolitan cities decreased 0.1% in the second quarter.

Stock Movers

Energy and miners traded higher after oil flirted in the $100 price zone and gold gained $10.66 to US$1,624.60.

BHP Billiton Ltd fell 73 cents to $41.57 and Rio Tinto decreased $1.47 to $80.05. Newcrest Mining Ltd increased 43 cents to $40.03.

Aquarius Platinum dropped 5% or 22 cents to $4.15 and was the leading decliner among the largest 100 mostly traded companies in Australia.

Banks closed lower after the Reserve Bank of Australia left rates on hold and investors also worried that the U.S. debt agreement may not solve the long term issues.

Commonwealth Bank of Australia decreased 67 cents to $49.42 and National Australian Bank decreased 52 cents to $23.97. ANZ declined 47 cents to $20.82.

Kathmandu increased 11 cents to $1.86 after the retailer of outdoor equipment estimated higher than expected earnings.

Westfield Retail Trust increased 3 cents to $2.49 and Stockland added 2 cents to $3.06.

Healthcare stocks closed lower. CSL declined $1.01 to $30.22 and Fisher and Paykel Healthcare dropped 7 cents to $2.