Rate Hike Less Likely in Australian as Inflation Stays Below 2%

Marcus Jacob
28 Jan, 2015
New York City

Australian inflation measure dipped below 2% for the first time in 2-

[R]5:30 PM Sydney – Australian inflation measure dipped below 2% for the first time in 2-½ years and core rate of inflation was stronger than expected. After the latest weak read on inflation, rate hike is not likely at the next meeting in February.[/R]

Aussie dollar gained after the latest inflation measure dipped below 2% for the first time in 2-½ year but core rate of inflation was ahead of expectations.

The Australian Bureau of Statistics reported consumer price index in the fourth-quarter jumped 1.7% less than estimated of 1.8% and drop from 2.3% in the third-quarter.

On a quarterly basis, inflation edged up 0.2% in the quarter ending in December compared to 0.5% in the previous three months.

Core inflation rate in the quarter was 0.7%.

Australian dollar closed at 79.90 U.S. cents and in stock-trading turnover slipped to 760 million shares worth $4.70 billion.

ASX 200 Index rose 5.60 to 5,552.80 and broader All Ordinaries Index increased 5.10 to 5,516.60.

In commodities trading, gold declined US$12 to US$1,290 an ounce and light crude oil increased $1.08 to US$46.23 a barrel.

Brent crude fell 39 cents to close at US$49.21 a barrel.

Australian Stock Movers

Bradken Limited tumbled 35.8% to $2.64 after the engineering group said private equity firms Bain Capital and Pacific Equity Partners withdrew $872 million takeover proposal.

Separately today, Bradken agreed to acquire Coimbatore-based iron manufacturing unit from Larsen and Toubro Ltd after winning the approval from Competition Commission of India.

Funtastic Limited plunged 11.5% to 0.023 cents after the toys, sporting and confectionery product distributor forecasted revenues in the first-half ending in January 31 between of $50 million and $54 million.

The company estimated EBITDA loss in the range of $2.5 million to $4.5 million mainly due to softer than estimated international sales and lower domestic margins.

OZ Minerals Limited climbed 4.9% to $3.61 after the mining company reported gold production in the year was 148,192 ounces, ahead of estimated range between 130,000 and 140,000 ounces.

The company said production of copper in the year was 92,615 tons from a year ago and above the guidance of between 85,000 tons and 90,000 tons.

The mining company will relocate its head office from Melbourne to Adelaide.