Australian Rates on Hold; Woodside Up

Darlington Musarurwa
02 Feb, 2010
New York City

Reserve Bank of Australia left its key lending rate unchanged at 3.75%. Australian business confidence fell in December. Hill Industries profits rise 40%. Woodside Petroleum increased nearly 4% after workers at Pluto natural gas project ended an eight-day strike.

[R]3:00 AM New York, 7:00 PM Sydney - Reserve Bank of Australia left its key lending rate unchanged at 3.75%. Australian business confidence fell in December. Hill Industries profits rise 40%. Woodside Petroleum increased nearly 4% after workers at Pluto natural gas project ended an eight-day strike.[/R]

Stocks in Australia gained sharply after the Reserve Bank of Australia left its key lending rate unchanged at 3.75%. Investors were bracing for 25 basis points increase.

Hill Industries also reported first half profits more than forecasted.

In Sydney trading ASX 200 Index gained 1.8% or 81.2 to 4,605.30.

Of the ASX 200 index stocks, 167 gained, 24 dropped, and 9 were unchanged. Macarthur Coal led gainers in the index shares with a rise of 13% followed by Hill Industries edging up 12.7%.

The Australian dollar fell 1.2% to 88.08 U.S. cents.

RBA Leaves Rates Unchanged

Reserve Bank of Australia today elected to keep its key rates unchanged at 3.75%.

According to the RBA governor Glenn Stevens, although the effects of the fiscal stimulus on consumer demand have faded, household finances continue to be supported by strong labor markets.

Australia’s unemployment has peaked at a lower level than earlier forecasted, while inflation is expected to be consistent with the target in 2010.

Monetary authorities, however, decided to hold the key rate in order to monitor the impact of rising loan rates by lenders.

In the accompanying statement Governor Stevens said, “Interest rates to most borrowers nonetheless remain lower than average. If economic conditions evolve broadly as expected, the Board considers it likely that monetary policy will, over time, need to be adjusted further in order to ensure that inflation remains consistent with the target over the medium term.”

Business Confidence Index Falls

National Australia Bank reported today the country’s business confidence index fell 11 points to 8 in December.

Weaknesses in retail trade, transport, personal and recreational services dragged the confidence index. Transport, finance and business services, including manufacturing improved.

Business conditions in the period were unchanged at 10 index points in December, but trading conditions rose 2 points to 17 and profitability climbed 1 point to 12 points.

The labour conditions index jumped 5 points to 7 and forward orders slipped 2 points to 7. In addition, capacity utilisation levels soared 0.2 percentage points to 81.6%.

The report also noted that exports remain weak at -13 points, while economy wide inflation remained unchanged at 0.3%.

NAB forecasted that core inflation to be near 2.3% by the end of 2010 and rise to around 2.6% in late 2011.

Hill Industries H1 Profits Rise 40%

Hill Industries, the maker and distributor of electronic security and industrial products reported today that net profit in the six months ended December rose 40% to A$22.1 million from A$15.8 million in the same period a year earlier.

The company estimated full-year net operating profit between A$36 million and A$42 million.

ASX Movers

Ardent Leisure Group led the decliners in the S&P ASX 200 index with a loss of 3.0% followed by losses in Healthscope Limited of 2.0%, in Charter Hall Group of 2.0%, in Minara Resources Limited 1.5% and in Bank of Queensland Limited 1.3%.

Macarthur Coal Limited led gainers in the S&P ASX 200 index with a rise of 13.0% followed by gains in Hills Industries Limited 12.7%, in Medusa Mining Limited of 11.4% and in Platinum Australia Limited of 11.1%.

Other Movers

Alumina Limited climbed 4.4% to A$1.63.

Aristocrat Leisure Limited rose 0.9% to A$4.45 after the maker of slot machines was upgraded to “buy” from “hold” at Royal Bank of Scotland Group Plc.

BHP Billiton plc the mining company added 3.2% to A$40.46 and Macarthur Coal Limited the engaged in exploration surged 13.0% to A$9.89.

Newcrest Mining Limited the gold producer increased 2.4% to A$31.71.

Rio Tinto Limited advanced 5.3% to A$71.01 and the metal and mineral production begun talks in Singapore with Chinese steelmakers for 2010 contract iron ore prices, a report by the China Times newspaper said.

Santos Limited the oil and gas explorer rose 1.4% to A$12.97.

Westfield Group rose 4.5% to A$12.90 and the owner of shopping malls declared a final distribution of 47 cents for the six months to December 2009.

Woodside Petroleum Ltd climbed 3.8% to A$43.20 after the oil and gas producer reported that workers are looking to take more industrial action after ending an eight-day strike at Pluto liquefied natural gas project according to a report by the Dow Jones.