Australian Banks Raise Rates; Stocks Fall

Marcus Jacob
10 Feb, 2012
New York City

Australian stocks edged lower for the second day following weak results from BHP Billiton and Rio Tinto. Ongoing turmoil in Greece also weighed on investor sentiment. ANZ and Westpac raised interest rates on mortgage lending.

[R]8:00 PM Sydney – Australian stocks edged lower for the second day following weak results from BHP Billiton and Rio Tinto. Ongoing turmoil in Greece also weighed on investor sentiment. ANZ and Westpac raised interest rates on mortgage lending.[/R]

Australian stocks declined for the second day in a row after weak results from two leading mining companies and continued turmoil in the euro zone.

Euro zone finance ministers differed to ratify agreement between Greece and troika and awaited the approval from the Greek parliament and written guarantees from three party leaders.

Investors were also concerned after two largest banks passed on higher mortgage lending rates to borrowers. ANZ lifted its mortgage rate by 6 basis points to 7.36% effective February 17 and Westpac raised its rates by 10 basis points to 7.46% as of February 20.

Australian banks have been passing on higher rates to consumer despite record net operating margins but banks have not increased similar rates on short term deposits. Banks also continue to pat gigantic salaries and not look for ways to cut expenses.

The ASX 200 index decreased 37.6 or 0.9% to 4,245.3 and All Ordinaries index fell 34.5 or 0.8% to 4,322.6. For the week the ASX index declined 0.35%.

In trading, turnover decreased to 1.8 billion shares worth $4.8 billion compared to 2.11 billion shares worth $4.97 billion on Thursday. Of the shares changing hands, 460 shares increased 511 decreased and 396 closed unchanged.

The Aussie dollar edged lower and closed down to US$1.07 from US$1.078.

Stock Movers

BHP Billiton Ltd fell 86 cents to $36.30 and Rio Tinto Ltd closed down $1.62 to $69.98.

Fortescue Metals Group decreased 15 cents to $5.24, Lynas Corporation Limited closed lower 2 cents to $1.39 and Iluka Resources decreased 33 cents to $17.74.

Newcrest Mining rose 57 cents to $34.01 after the gold miner reported record first-half profit.

Oil Search Limited decreased 1 cent to $6.52, Santos Limited fell 17 cents at $13.89 and Woodside Petroleum fell 18 cents to $35.40.

Commonwealth Bank of Australia decreased 53 cents to $49.88 and ANZ fell 20 cent to $21.42 and Westpac inched lower 23 cents to $20.85. National Australia Bank fell 6 cents to $22.94.

David Jones Limited decreased 4 cents to $2.50 and Harvey Norman Holdings closed down 2 cents to $2.06. Wesfarmers Limited fell 40 cents to $29.35.

James Hardie declined 21 cents to $7.22 after the company won a tax ruling against the Australian Taxation Office.

Qantas Airways Ltd declined 4 cents to $1.58, Virgin Australia was unchanged at 35.5 cents and Flight Centre increased 29 cents to $20.74.

QR National closed up 3 cents to $3.81.