Australian Rates on Hold and ASX 200 index in 6-Day Slump

Marcus Jacob
15 Dec, 2015
New York City

ASX 200 declined for the sixth day in a row after Australia''s government said its budget deficit would deteriorate. The Reserve Bank of Australia kept its interest rates unchanged at 2%. Rio Tinto said it plans to invest $4.4 billion in Mongolian copper mine.

[R]5:30 PM Sydney, Australia – ASX 200 declined for the sixth day in a row after Australia''s government said its budget deficit would deteriorate. The Reserve Bank of Australia kept its interest rates unchanged at 2%. Rio Tinto said it plans to invest $4.4 billion in Mongolian copper mine.[/R]

ASX 200 market index plunged deeper in negative territory amid plummeting iron ore prices, deteriorating budget deficit, and record low interest rates.

The government mid-year budget review forecasts a deficit of $37.4 billion for the financial year ending June 30, 2016, an increase from the earlier estimate of $35.1 billion.

The annual economic growth rate outlook was lowered to 2.5% from 2.75%, largely on the worsening export outlook for the iron ore, the largest revenue earner.

“The price we are able to achieve in global markets in iron ore went from a high of $180 a ton to $38, $39 a ton at the moment,"" said the financial minster Mathias Cormann.

""When iron ore is about 20% of our national export income, of course you''d expect that to flow through,"" added Cormann.

In addition, the Reserve Bank of Australia kept interest rates on hold at a record low of 2%.

Mining giant BHP Billiton Limited was among the major losers, down 1.99% to $16.27.

The Australian dollar slipped to 72.53 U.S. cents and trading turnover jumped to 834 million shares worth $5.1 billion.

At the market close, the ASX 200 Index slipped 19 or 0.4% to 4,909.60, while the broader All Ordinaries Index decreased 18 to 4,963.90.

In commodities trading, gold declined US$12 to US$1,064 an ounce and Brent crude future for immediate month delivery slid 18 cents to US$37.75 a barrel.

IPO

Apiam Animal Health Limited soared 26% to $1.26 after the animal health care services provider priced its stock at $1.

The stock opened at $1.20 and closed at $1.26.

PSC Insurance Group Limited surged 44.5% to $1.45 after the insurance services provider priced its stock at $1.

The stock opened at $1.42 and closed at $1.45 cents.

Australian Stock Movers

Qantas Airways Limited slumped 2.4% to $3.69 despite upgrading its operating profit forecast for the first-half of fiscal 2016 to $875 million to $925 million as a result of lower fuel prices, $2 billion Qantas Transformation program, and revenue growth.

Qantas said passenger count in November jumped 4.4% to 4.23 million.

Sealink Travel Group Ltd declined 2.9% to $3.40 after the tourism and transport group signed a five-year contract with Sibelco Australia to transport mineral sands from Stradbroke Island.

Rio Tinto Limited decreased 1% to $41.76 after the mining company and partners secured financing for the $4.4 billion expansion of a Mongolian copper mine.

The expansion is financed by 20 institutions, including Australian government''s Export Finance and Insurance Corporation export credit agencies from Canada and the United States, World Banks’s IFC, commercial banks including National ANZ, and BNP Paribas.