RBA Left Rate at 3%, Australian Dolllar Rises

Darlington Musarurwa
02 Jun, 2009
New York City

Australian dollar edged higher in New York trading to close near 82 U.S. cents. The Reserve Bank of Australia left its cash rate unchanged for the second month in a row at 3% and cited the prospect of weak inflation in medium term. Commodities and financial led the most active stocks in trading.

[R]8:00 AM Sydney, 6:00 PM New York – Australian dollar edged higher in New York trading to close near 82 U.S. cents. The Reserve Bank of Australia left its cash rate unchanged for the second month in a row at 3%. Commodities and financial led the most active stocks in trading.[/R]

The Reserve Bank of Australia left its cash rate unchanged at 3% for the second month in a row.

The governing board cited improving global economic conditions and rising international trade and a pick-up in housing demand. However, the central bank left room for lowering the rates in the future as ‘the prospect of inflation declining in medium term.’

The ASX 200 in Tuesday’s trading closed up 1.5% to 3,955.30. The Australian dollar in New York trading on Tuesday closed up 1.4% to 81.94 U.S. cents as dollar turned lower against all major currencies.

In the overnight trading, stocks in the U.S. and in Europe closed higher as commodities and financials advanced. Auto stocks in Japan closed higher after the prospect of market share gains increase in the U.S. after General Motors filed bankruptcy protection.

Toyota, GM and Chrysler reported weaker than expected sales in May in the U.S. Industry sales in May declined 33.7% to 925,824 vehicles including cars and light trucks.

UK mortgage approvals increased in April and U.S. existing home sales increased at the fastest pace in seven years. French producer price index declined 0.9% in April and EU-16 region unemployment surged to 9.2% in the month with Spain and Baltic nations leading the region with more than 17% rate.

Gainers & Losers

Billabong International surged 7% to A$8.38 after Credit Suisse analyst raised the stock to ‘neutral’ from ‘unerperform.’ The company recently completed A$230 million offering at A$7.50 a share.

BHP Billiton Limited increased 2.7% to A$36.70 and Rio Tinto Limited 4% to A$69 after it settled disputes with China Steel at a price agreed with Nippon Steel. The company lowered prices of iron shipment by 33% from a year ago.

Pacifica Group shares were unchanged at 13 cents after it said that GM bankruptcy will hurt earnings this year.

Banks traded mixed. Commonwealth increased 0.55 to A$36.33, National Australian Bank increased 1% to A$22.80 and Westpac declined 1% to A$18.76.

Telstra declined 2 cents to A$3.07.


ASX 200 Index Movers

PaperlinX Limited led the decliners in the ASX 200 index of 7.4% followed by losses in Nexus Energy Limited of 6.2%, in Amcor Ltd of 3.4%, in Eastern Star Gas Limited of 3.4% and in GPT Group comprises General Property Trust of 3.0%.

Boart Longyear Group led gainers in the ASX 200 index with a rise of 15.3% followed by gains in Platinum Asset Management Limited of 13.0%, in Bradken Limited of 11.1% and JB Hi-Fi Limited of 10.3%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 26.56 or 0.27% to 9,704.31, Hang Seng index in Hong Kong decreased 499.51 or 2.64% closed to 18,389.08, CSI 300 index in China higher 6.76 or 0.24% closed to 2,865.10. ASX 200 index in Australia increased 60.90 or 1.56 % closed to 3,955.30. The KL Composite index in Malaysia higher 1.82 or 0.17% closed to 1,063.62.

The Kospi Index in South Korea decreased 2.25 or 0.16% to close at 1,412.85. SET index in Thailand closed lower 5.68 or 0.98% to 574.30 and JSE Index in Indonesia increased 0.06 or 0.00% closed to 1,998.64. The Sensex index in India increased 34.28 or 0.23% closed to 14,874.91.