Australia Leaves Rates at 3%

Darlington Musarurwa
01 Sep, 2009
New York City

Reserve Bank of Australia left its key lending rate unchanged at 3% and the bank cited the global economic stimulus and rising commodities prices. Manufacturing expanded in August and new dwelling constructions approvals increased in July.

[R]1:00AM New York, 6:00PM Sydney - Reserve Bank of Australia left its key lending rate unchanged at 3% and the bank cited the global economic stimulus and rising commodities prices. Manufacturing expanded in August and new dwelling constructions approvals increased in July.[/R]

Australian stocks rose 0.8% after the RBA left key lending rate unchanged.

Economic indicators indicate better economic conditions and with manufacturing activity expanding in August and total dwelling approvals gaining in July.

Commodity stocks were, however, mixed. Crude oil prices fell 3.8% to $70 a barrel and gold prices declined 0.6% to $953.50 per ounce.

In Sydney trading the ASX 200 Index gained 0.8% or 35.5 to 4,514.60.

Of the ASX 200 index stocks, 90 rose, 100 fell, and 10 were unchanged. Transpacific led advancers in the index shares with a rise of 12.1% followed by Atlas Iron climbing 7.4%.

RBA Keeps Key Rate Unchanged

Reserve Bank of Australia left its key benchmark interest rate unchanged at 3%, as economic indicators point to a recovery in the economy.

Consumer spending, business investment and exports remain “resilient” on strong demand from China and increased stimulus measures from the government that have supported domestic demand.

The RBA notes that dwelling activity and public demand will continue to support spending and growth in 2010.

Reserve Bank of Australia Governor Glenn Stevens highlighted that the global economic stimulus around the world is resuming growth. Further, Growth in China has been very strong which is lifting commodities demand and economies in the region.

“The Board’s judgement is that the present accommodative setting of monetary policy remains appropriate for the time being. The Board will continue to adjust monetary policy so as to foster sustainable growth in economic activity and inflation consistent with the target,” said RBA in the accompanying statement.

Dwelling Approvals Rise 7.7% in July

Australia’s total dwelling units approvals in July rose 7.7% from a month earlier and dropped 3.9% from a year ago to 12,048.

In addition, private sector houses approved rose 1.5% from a month ago and increased 4.7% from a year earlier to 8,515, while private sector other dwellings approvals rose 35.3% to 3,007 in the month.

Current Account Deficit by A$7 billion

Separately, Australian Bureau of Statistics said the country’s current account deficit advanced by A$7 billion from the previous quarter to A$13.3 billion in the three months to June.

The income deficit in the review period jumped 10% to A$11.5 billion.

Australia’s Manufacturing Expands in August

Australian Industry Group and PricewaterhouseCoopers reported today its performance of manufacturing index gained 7.2 to 51.7 in August from a month ago, rising for the first time in 14 months.

Aussie Falls 0.2%

The Australian dollar dropped 0.2% to 84.24 against the dollar in today’s trading.

ASX Movers

Molopo Australia Limited led the decliners in the S&P ASX 200 index with a loss of 6.6% followed by losses in Avoca Resources Limited of 6.0%, in APN News & Media Ltd of 5.5%, in Dominion Mining Limited of 5.2% and in Centennial Coal Company Limited of 4.8%.

Transpacific Industries Group Ltd led gainers in the S&P ASX 200 index with a rise of 12.1% followed by gains in Atlas Iron Limited 7.4%, in PMP Limited of 5.9% and BlueScope Steel Limited of 5.5%.

Other Movers

AMP Capital Investors rose A$1.06 after the pension plan may boost its Japan allocation after the election.

APN News & Media Ltd fell 5.5% to A$1.78.

Atlas Iron Limited added 7.4% to A$1.74 reported net loss of A$63.1 million net loss for the fiscal 2009.

Avoca Resources Limited slipped 6.0% to A$1.64 after the mineral exploration and resource development said a $16.3 million loss for the 2009 financial year a much wider loss than the $1.3 million loss recorded in fiscal 2008.

Centennial Coal Company Limited 4.8% to A$3.34.

Dominion Mining Limited slipped 5.2% to A$3.82 after the production and exploration of gold said a net profit of A$31.1 million for fiscal 2009 as higher gold prices offset lower production volumes.

Molopo Australia Limited declined 6.6% to AS$1.12 after the petroleum explorer is looking to acquire assets in Canada.

PMP Limited rose 5.9% to A$0.805 after the printing and media services company has entered into an agreement to buy Independent Magazine Distributors via Gordon and Gotch NZ Ltd.

Transpacific Industries Group Ltd rose 12.1% to A$1.52 after Macquarie Group Limited lowered its holding in the company below the ‘substantial holder’ as defined by the regulators.