Australian Economy Expands 0.2%

Darlington Musarurwa
16 Dec, 2009
New York City

Australian economy expanded 0.2% in third quarter ending in September after expanding at 0.6% in the second quarter. The economy was expanded 0.5% from a year ago. The Australian competition regulators oppose Breville acquisition.

[R]3:00 PM New York, 7:00 AM Sydney - Australian economy expanded 0.2% in third quarter ending in September after expanding at 0.6% in the second quarter. The economy was expanded 0.5% from a year ago. The Australian competition regulators oppose Breville acquisition.[/R]

Australian stocks dropped 0.3% after the economy grew less-than-forecasted in September.

In Sydney trading ASX 200 Index fell 0.3% or 11.6 to 4,661.90. Of the ASX 200 index stocks, 60 rose, 130 declined, and 10 were unchanged.

Hastie Group led gainers in the index shares with a rise of 5.1% followed by Paperlinx Ltd. of 5.1%.

The Australian dollar fell 1% to 89.73 against the dollar.

Australia Economy Rises 0.2% in September

The Australian Bureau of Statistics reported today that gross domestic product rose 0.2% in the three months ended September from the previous quarter in seasonally adjusted terms.

GDP growth was buoyed by a 0.7% increase in household expenditure and a 6.2% rise in public investment.

However, private investment dropped 0.9% fall in private investment, while net exports were dragged by a 2.3% fall in exports and a 5.8% rise in imports.

Industries that mainly contributed to growth in the review period were rental, hiring and real estate services gaining 9.9% and construction rising 2.2%.

Australia Interest Rates in Normal Range

The Australian reported that Reserve Bank of Australia deputy governor Ric Battellino said today in a speech to the Australasian Finance and Banking Conference in Sydney the “overall stance of monetary policy is now back in the normal range, though in the expansionary segment of that range.”


Battellino notes that interest rates on housing and business loans and on deposits and debt security had all risen relative to the cash rate.

“As you know the cash rate is currently 3.75%. This is still 50 basis points below the previous cyclical low of 4.25% in 2001. On the surface this might suggest the cash rate is still unusually low. ""However, with other interest rates in the economy having risen by at least 100 basis points relative to the cash rate over the past couple of years they are now above their previous cyclical lows,” said Battellino.

ACCC Opposes Breville Acquisition

The Australian Competition and Consumer Commission announced today that it will block the proposed acquisition of Breville Group Limited by GUD Holdings Limited as it will lessen competition of supply of small electrical appliances.

GUD Holdings supplies the Sunbeam and Emjoi ranges of small electrical appliance products in Australia, while Breville Group supplies the Breville, Kambrook, Ronson and Philips ranges of products.

The ACCC Chairman Graeme Samuel noted the two companies are “each other''s closest competitors, and impose the strongest constraint on each other in relation to the wholesale supply of small electrical appliance products.”

Gainers & Losers

Hastie Group led gainers in the ASX 200 index stocks with a rise of 5.1% followed by increases in Paperlinx Ltd. of 5.1%, in Astro Japan Property of 4.9%, in Sundance Resources of 3.6%, and Elders Ltd. of 3.3%.

Pacific Brands led decliners in the ASX 200 index shares with a fall of 6.2% followed by losses in SMS Management of 5.8%, in Atlas Iron Ltd. of 4.3%, in Commonwealth Property Group of 4.2%, and Energy World Corporation of 4.1%.

Commodity stocks fell as crude gold prices dropped 0.1% to $1,122 per ounce. Avoca Resources slipped 4% to A$1.79 and Mincor Resources tumbled 3.1% to A$1.72.

Other Movers

CSR Limited added 0.8% to A$1.73 after the sugar refiner was upgraded to “buy” from “hold” at Deutsche Bank AG.

Iluka Resources Limited advanced 1.7% to A$3.48 after the zircon producer was upgraded to “hold” from “sell” at ABN Amro Holding NV.

News Corporation climbed 2.7% to A$16.90 after the stock was upgraded to “buy” from “hold” at Deutsche Bank AG.

Perpetual Limited decreased 3.9% to A$35.43 after the Australian fund manager was downgraded to “underperform” from “neutral” at Credit Suisse Group AG.

Santos Limited the oil and gas producer rose 1.9% to A$13.87.