New Zealand Lowers Rates to 3.5%

123jump.com Staff
29 Jan, 2009
New York City

New Zealand aggressively cut its benchmark lending rate to 3.5% from 5% as the central bank lowers its view on the global economic conditions and prospects of higher exports. Stocks in Australia edged higher 0.9% on higher commodities prices.

[R]3:00AM New York, 7:00PM Sydney- New Zealand aggressively lowers interest rates to 3.5%. Lend Lease warns of further write-downs of A$290 million in the first half.[/R]

Australia stocks rose on rising energy prices and on expectations that the recently passed U.S. stimulus package may help cure a deteriorating global economy. The proposed package is mostly a spending package with lot of special favors to politicians.


The surge was however capped by profit taking as investors locked in gains in anticipation of a global pullback.

In Sydney trading ASX 200 index rose 0.9% or 30.7 to 3,526.20.

Of the ASX 200 index stocks, 96 increased, 80 declined, and 24 were unchanged. Macquarie Office led gainers in the index shares with a rise of 10.5% followed by Independence Group rising 9.3%.

New Zealand Cuts Rates to 3.5%

Reserve Bank of New Zealand today elected to sharply cut its official cash rate to 3.5% from 5% as the outlook for international growth has been significantly downgraded.

Since July 2008 the interest rates have been cut by 4.75 percentage points.

The Reserve Bank Governor Alan Bollard noted that, “uncertainty about the timing and strength of recovery” despite the considerable policy stimulus that has been put in place globally.

The bank noted that slowing inflation rate has made it possible to adjust the official cash rate to a much stimulatory level.

Bollard added, “Lower interest rates will have a positive impact on growth, alongside a lower exchange rate and fiscal stimulus, provided firms and households do not unnecessarily contract their spending. To ensure the response we are seeking, we expect financial institutions to play their part in the economic adjustment process by passing on lower wholesale interest rates to their customers.”

U.S. House Passes $825 billion Stimulus Plan

U.S. House of Representatives yesterday passed the $825 billion stimulus plan by overwhelming majority. The Democratic Party controlled bill is likely to pass the Senate with few modifications and may be increased in scope and spending size to $900 billion.

Gainers & Losers

Macquarie Group led gainers in the ASX 200 index shares with a rise of 10.5% followed by increases in Independence Group of 9.3%, in Gloucester Coal of 8%, in Straits Residential Ltd. of 8%, and Aquarius Platinum of 7.3%.

Energy stocks gained as crude oil prices edged up 50 cents to $42.2 per barrel. Nexus Energy advanced 6%.

PanAust led decliners in the ASX 200 index shares with a decline of 10% followed by losses in Transpacific Industries of 8.1%, in Babcock & Brown of 7.5%, in HFA Holdings of 7.4%, and Mount Gibson Iron of 7.1%.

Commodity stocks slipped as gold prices dropped $16 to $883 per ounce. Newscrest Mining slipped 4.7% and Lihir Gold plummeted 3.9%.

Lend Lease Warns of Write-downs A$290 million

Lend Lease said today in response to a price query from the Australian Stock Exchange that further impairment in the carrying values of tangible assets and goodwill in its retail and community businesses in the UK, U.S. and Australia might top A$290 million in the six months ending December 31.

The report says the impairment might be due to a reduction in the carrying value of goodwill relating to Delfin Lend Lease of A$80 million after tax, and a potential reduction of A$210 million after tax relating to the carrying values of commercial
assets in the UK and residential assets in the US and Australia.

The company reiterated its guidance for operating profit after tax between 10% to 15% below the previous year of A$447.1million.