Australian Rates on Hold, Dollar Slide to Continue

Marcus Jacob
02 Jul, 2013
New York City

Reserve Bank of Australian held its cash rate for the second month but held out possibility of a future rate cut. Market indexes soared 2.6%, largest one-day gain in 19 months. Boart Longyear plunged 11% on debt rating downgrade.

[R]5:30 PM Sydney – Reserve Bank of Australian held its cash rate for the second month but held out possibility of a future rate cut. Market indexes soared 2.6%, largest one-day gain in 19 months. Boart Longyear plunged 11% on debt rating downgrade.[/R]

Australian stocks rebounded after Reserve Bank left its cash rate on hold and held out the possibility of rate cut in the future.

The monetary policy committee left cash rate at 2.75%, Reserve Bank of Australia said in a statement released today.

Market indexes registered their best single day gain in 19 months after comments from the central bank.

The yield on 3-year bond declined to 2.77% from 2.79% after the central bank announcement.

The ASX 200 index climbed 123.70 or 2.6% to close at 4,834 and the broader All Ordinaries jumped 120.60 to 4,810.30.

Australian dollar closed at 91.60 U.S. cents and in stock trading turnover jumped to 807 million shares worth $4.4 billion.

A separate report from the government showed Australian unemployment declined to 5.5% in May from a revised 5.6% in April. A private survey showed consumer confidence increased 4.7% in June, according to a private survey.

Stocks in Review

Rio Tinto jumped $1.34 to $53.07 and BHP climbed $1.13 to $32.07. Woodside Petroleum Limited increased $1.07 to $35.82.

Mirabela Nickel Limited plunged 18% after the Brazil focused miner lowered its production target to a range between 17,000 to 18,500 tons of nickel concentrate because of maintenance related disruptions.

Boart Longyear Limited plummeted 11% after Moody’s lowered its debt rating for the second time in as many months.

David Jones Limited gained 10 cents or 4% to $2.58 and Breville Group closed unchanged at $7.

Woolworths advanced 72 cents to $32.92.

Mirvac Group rose 7 cent or 4.8% to $1.64. Lend Lease surged 43 cents or 5.35 to $8.58.

Westpac increased 45 cents to $28.42, Commonwealth jumped 2% to $68.90 and National Australia Bank gained 1% to $29.26 and ANZ climbed 66 cents to $28.48.

BC Iron Limited climbed 5% to $3.36 after the iron ore mining company reported record annual production at its Nullagine iron ore project for the year to June.

Dexus Property Group jumped 2.4% to $1.07 after the property developer lifted its 2014 financial year and expects earnings to increase 5.2% and group estimated to pay 8.15 cents a share in dividend for the fiscal year ending on June 30, 2014, a 5.2% increase from 2013.

Mirvac Group soared 4.8% to $1.64 after the real estate investment firm sold its 50% interest in the land and development of its 200 George Street office project to AMP Capital for $317 million.

TFS Corporation Ltd climbed 4.1% to 50 cents after the sandalwood plantation company expects sales for the year to jump 132% and full-year cash EBITDA of at least $35 million.

TFS earned net profit in the first half of fiscal 2013 of $4.8 million.

Brambles Limited gained 3% after the company said it plans to spin-off its information management business and retailed its full-year earnings outlook.