Australian Rate Cut Hopes Dashed, Rio Production Up 4%

Marcus Jacob
17 Jul, 2012
New York City

Australian indexes closed higher for the third day after the RBA highlighted the economic strength in its latest assessment. The dollar closed higher and investors shifted attention to the next meeting of the central bank on August 7. Rio Tinto said first half iron production increased 4%.

[R]7:30 PM Sydney – Australian indexes closed higher for the third day after the RBA highlighted the economic strength in its latest assessment. The dollar closed higher and investors shifted attention to the next meeting of the central bank on August 7. Rio Tinto said first half iron production increased 4%.[/R]

Australian stocks closed higher for the third day in a row and investors dialed back the expectations of another rate cut.

Reserve Bank of Australia in its latest economic assessment said that it held the reference rate to 3.5% because economy is on the mend and healthier than six months ago. The central bank also highlighted that the rates have been cut by 125 basis points since November and given the state of the economy it sees no need for additional rate cut for now.

The ASX 200 index gained 35.70 to 4,140.80 and All Ordinaries index increased 32.12 to 4,175.32.

The Australian dollar closed at US$1.03 and traded at a new record of 83.86 euro cents. Gold price for the immediate delivery edged up $3 to $1,593 an ounce and oil futures closed flat at US$88 a barrel.

In trading, stock turnover increased to 1.93 billion shares worth $3.3 billion and 473 stocks closed higher, 413 declined and 335 were unchanged.

Rio Tinto said iron ore production in the second quarter to June increased to 62 million tons from 59 million tons in the first quarter when inclement weather affected production.

In the first half, Rio shipped 115 million tons of iron ore, 4% higher than in the same period a year ago. Production of copper increased 5% and thermal coal was flat compared to a year ago period.

Stock Movers

News Corp fell 2 cents to $21.56 and Ten Network closed up 2.5 cents at 50.5 cents and Fairfax Media rose 2.5 cents to 57.5 cents.

Seven West Media was halted after it last traded at $1.62 and the company announced a plan to raise $440 million at $1.32 per share price.

BHP Billiton Limited added 2 cents to $30.79 and Rio Tinto Limited fell 5 cents to $54.44 and the miner reported record iron ore production and sales in the first half.

Fortescue Metals Group decreased 10 cents to $4.54 after the third largest iron ore miner said it may need to raise at least $1 billion to cover the project overrun costs of $600 million. The company also lifted its full-year sales target for the current year by 40% to 55.8 million tons.

Iluka Resources rose 3 cents to $9.04, Lynas Corporation Limited closed up 3.5 cents at 88.5 cents, Newcrest Mining advanced 52 cents to $22.02 and Kingsgate increased 8 cents to $4.95.

Whitehaven Coal slid 3.2% or 13 cents to $3.94 after billionaire Nathan Tinkler submitted a formal takeover proposal.

Oil Search Limited gained 9 cent to $6.59 and Santos Limited added 7 cents to $10.40.

Woodside Petroleum advanced 22 cents to $30.78 after it won environmental approval for its $30 billion natural gas project in Kimberly region.

PaperlinX fell 0.5 cent to 4.1 cents after the company sold its international assets and the company chief executive resigned.

Metcash closed up 8 cents at $3.28, Harvey Norman Holdings rose 2 cents to $1.95 and Woolworths increased 18 cents to $27.10. Kathmandu unchanged to $1.11.

David Jones Limited closed down 6 cents to $2.31. Telstra gained 5 cents to $3.88 and Billabong International Limited unchanged to $1.05.

Commonwealth Bank of Australia advanced 84 cents to $54.90 and Bank of Queensland increased 16 cents to $6.81. ANZ gained 39 cents to $22.87. National Australia Bank added 20 cents to $23.70 and Westpac Banking Corporation increased 34 cents to $22.50.

Macquarie Group rose 1 cent to $25.36 and Perpetual Limited slipped 15 cents to $23.05.

ClearView Wealth Management closed up 0.5 cent to 54 cents after its board unanimously rejected $220 million takeover bid from CCP Bidco.

Leighton decreased 14 cents to $15.74, Stockland added 1 cent to $3.17 and Toll Holdings gained 3 cents to $3.83.

Qantas up 2 cents to $1.05, Virgin Australia closed down 1 cent at 37.5 cents and Flight Centre advanced 56 cents to $21.32.

QR National fell 1 cent to $3.28.