RBA Lowers Rate to 3%, Australian Current Account Deficit Widens

Marcus Jacob
04 Dec, 2012
New York City

Australian markets halted a 3-day rally and the benchmark index declined 0.6%. Reserve Bank of Australian cut its key lending rate by 25 basis points to 3% and cited global weak economic conditions. Current account deficit widened in the third quarter to $14.9 billion.

[R]7:30 PM Sydney – Australian markets halted a 3-day rally and the benchmark index declined 0.6%. Reserve Bank of Australian cut its key lending rate by 25 basis points to 3% and cited global weak economic conditions. Current account deficit widened in the third quarter to $14.9 billion.[/R]

Reserve Bank of Australia lowered its reference rate by 25 basis points to 3% and cited global economic conditions.

The latest move was anticipated by economists after the release of the latest batch of weak economic data including corporate profit, retail sales and housing starts.

The central bank did not indicate where the rates are likely to trend in the next six months but rates are already at the lowest level last seen in late 2008 and early 2009 period when global markets conditioned worsened and the European debt crisis erupted.

Australian mining sector investment is peaking and likely to settle at a lower level than earlier expected. The sharp decline in investment is likely to slow the economy down further after a record 21 years of expansion without a recession.

Separately, Australian Bureau of Statistics said current account deficit in the third quarter to September widened to $14.9 billion from $12.4 billion in the quarter a year ago.

Stocks in Sydney halted a 3-day rally and the benchmark index fell 0.6%.

The ASX 200 index fell 27.90 or 0.62% to 4,531.5 and the broader All Ordinaries decreased 28.20 or 0.6% to 4,511.8.

Australian dollar inched higher to $1.0423.

In stock trading, 1.2 billion shares changed hands worth $3 billion and 343 stocks closed higher, 614 declined and 353 were unchanged.

Stock Movers

BHP Billiton Limited decreased 28 cents to $34.26 and Rio Tinto Limited fell 13 cents to $58.41.

Mirabela Nickel fell 1 cent to 43 cents and Newcrest Mining declined 46 cents to $24.80. Kingsgate Consolidated fell 19 cents to $4.69 and Whitehaven Coal declined 2 cents to $3.01.

Transfield Services closed down 3 cents at $1.69 and engineering contractors WorleyParsons Limited fell 42 cents to $24.22.

Monadelphous Group fell 59 cent to $21.46.

Oil Search Limited fell 11 cents to $6.95 and Santos Limited decreased 11 cents to $11.06.

Woodside Petroleum fell 3 cents to $34.08 and Origin Energy Limited increased 10 cents to $11.17.

Seven West Media unchanged at $1.62 and Harvey Norman Holdings declined 1 cent $1.79.

Woolworths decreased 11 cents to $29.32 and Kathmandu edged down 1 cent to $1.45.

David Jones Limited increased 1 cent to $2.45 and Wesfarmers fell 34 cents to $35.61. Breville Group declined 3 cents $5.87.

Billabong International Limited rose 0.05 cent to 87.5 cents.

Commonwealth Bank of Australia declined 31 cents to $60.50 and Bank of Queensland increased 1 cent to $7 and ANZ fell 10 cents to $24.59.

Macquarie Group Limited fell 31 cents to $32.50 and Perpetual Limited decreased 60 cents to $31.17. National Australia Bank fell 4 cents to $24.25. Westpac declined 14 cents to $25.42.

Toll Holdings decreased 5 cents to $4.57, Leighton fell27 cents to $16.93 and property developer Mirvac Group decreased 1 cent to $1.48.

Westfield Group declined 8 cents to $10.42.

Qantas closed unchanged at $1.32, Flight Centre increased 11 cents to $27.36 and Virgin Australia closed unchanged at 44 cents.

QR National closed unchanged at $3.69 and Telstra closed down 3 cents to $4.32.