Australian Rates on Hold; Weak Retail Sales Growth

Marcus Jacob
03 Apr, 2012
New York City

Australian stocks inched higher in a directionless trading after the central bank left its key lending rate on hold but held out a possible rate cut at its next meeting in a month. Retail sales in February grew at anemic rate highlighting weak consumer spending.

[R]8:00 PM Sydney – Australian stocks inched higher in a directionless trading after the central bank left its key lending rate on hold but held out a possible rate cut at its next meeting in a month. Retail sales in February grew at anemic rate highlighting weak consumer spending.[/R]

Stocks in Sydney trading were little changed after the RBA left rates on hold and retail sales grew at slower pace than expected.

Reserve Bank of Australia left its key lending rate at 4.25% but acknowledged that there is a room for a rate cut at the next meeting on May 1 if inflation remains under control.

The Australian dollar fell half a cent to $1.04, 85.2 yen and 78 euro cents and to 65 pence.

The ASX 200 index rose 7.70 to 4,337.00 and All Ordinaries index increased 8.02 to 4,424.40.

Retail sales in February increased 0.2% following a 0.3% rise in January according to the latest data released by the Australian Bureau of Statistics.

Seasonally adjusted monthly sales rose to $20.988 billion compared to a downwardly revised $20.95 billion in January. Sales in New South Wales decreased 0.6% and declined 0.4% in Victoria in the month. In Queensland sales rose 1.5% and in Western Australian added 1%.

Retail sales are likely to struggle in the year following the worst gain in 2011 since the record keeping began in 1984.

Stock Movers

Miners advanced in the session bucking the trend in the general market and BHP Billiton rose 6 cents to $35.18 and Rio Tinto soared 60 cents to $66.79.

Aquila Resources gained 6 cents to $5.01 after it said it plans to sell 50% stake sale in Isaac Plains coal mine to a subsidiary of Sumitomo Corp for $430 million.

Lynas Corporation Limited closed down 2 cent to $1.06 and Iluka Resources decreased 13 cents to $18.15.

Newcrest Mining dropped 31 cents to $29.19 and Kingsgate slipped 19 cents to $6.30.

Norton Gold Fields Ltd jumped 27% to 23.5 cents after China based Zijin offered an offer to acquire rest of the stake in the company at 27 cents a share valuing the entire company at $229 million. Zijin owns 17% stake in gold miner.

Oil Search Limited rose 2 cent to $7.06. Woodside Petroleum decreased 8 cents to $35.28 and Santos Limited advanced 13 cents to $14.42. Oil Search gained 2 cents to $7.06.

Transfield Services were halted after the last trade at $2.49 on the company request after it announced a business review.

Retailers fell after February sales growth was less than expected following a weak monthly sales growth in the last four months in a row.

David Jones Limited closed up 1 cent to $2.42, Harvey Norman Holdings closed down 1 cent to $1.97 and Woolworths increased 6 cent to $25.70. Myer decreased 4 cents to $2.23 and Kathmandu closed down 3 cent at $1.30.

Billabong International Limited fell 1 cent to $2.80.

Westpac Banking Corporation gained 10 cent to $21.82 and Commonwealth Bank of Australia increased 9 cents to close at $50.04. Bank of Queensland dropped 11 cents to $7.05.

Macquarie Group soared 30 cents to $29.15.

Real estate developers closed mixed Westfield Group closed down 7 cents to $8.78 and Stockland rose 1 cent to $2.95.

Qantas fell 1 cent to $1.73, Virgin Australia decreased 0.025 cents to 42.5 cents and Flight Centre advanced 36 cents to $21.95. QR National rose 1 cent to $3.73.