Australia Lifts Key Rate to 4%

Darlington Musarurwa
02 Mar, 2010
New York City

Reserve Bank of Australia raises rates to 4%. Australian building approvals fall 7% in January. Retail sales rise 1.2% to A$20.1 billion in January. Tatts Group buys NSW lotteries for A$850 million.

[R]3:00 AM New York, 7:00 PM Sydney - Reserve Bank of Australia raises rates to 4%. Australian building approvals fall 7% in January. Retail sales rise 1.2% to A$20.1 billion in January. Tatts Group buys NSW lotteries for A$850 million.[/R]

Australian stocks rose fractionally as the Reserve Bank of Australia increased its key rate by 25 basis points. Gains were trimmed as building approvals declined in January, according to a government report.

In Sydney trading ASX 200 Index rose 0.3% or 15.4 to 4,701.90.

Of the ASX 200 index stocks, 100 advanced, 79 declined, and 21 were unchanged. Energy World Corp. led gainers in the index shares with a rise of 11.1%.

The Australian dollar declined 0.3% to 89.83 U.S. cents.

RBA Increases Rates to 4%

Reserve Bank of Australia today elected to raise its key rate by 25 basis points to 4% and the central bank noted that inflation is expected “to be consistent with the target in 2010.”

“The Board judges that with growth likely to be close to trend and inflation close to target over the coming year, it is appropriate for interest rates to be closer to average. Today’s decision is a further step in that process,” said RBA.

Building Approvals Fall 7% in January

Australian Bureau of Statistics reported today that the total dwelling units approved decreased 7% to 14,045 units in January from a month ago and declined 47.6% from a year earlier.

The seasonally adjusted estimate for private sector houses approved rose 0.3% from December and climbed 36.4% to 9,630 units.

Also the estimate for private sector other dwellings approved fell 29.1% to 2,880 units.

The value of total building approved fell 24.6% in January, while the seasonally adjusted estimate for the value of new residential building approved fell 4.4%.

Approved residential alterations and additions fell 16.8% and the value of non-residential building fell 41.9%.

Retail Sales Rise 1.2% to A$20.1 billion

Separately, the statistics agency reported that retail sales rose 1.2% to A$20.1 billion in January from a month ago.

All industries increased in trend sales, with cafes, restaurants and takeaway food services 0.7%; department stores 0.4%; clothing, footwear and personal accessory retailing 0.4%; household good retailing 0.3%; food retailing 0.3%and other Retailing 0.3%.

Western Australia gained 0.7%, New South Wales 0.6%, the Australian Capital Territory 0.5%, South Australia 0.3%, Victoria 0.3% and the Northern Territory 0.2%.

However, Tasmania fell 0.2% while Queensland remained unchanged.

Tatts Buys NSW Lotteries For A$850 million

Dow Jones Newswires reported that NSW sold its lotteries business today to Tatts Group for A$850 million.

Analysts had earlier expected a deal in the range of A$600 million to A$700 million.

Tatts purchased the business to compensate for the future loss of its Victorian state slot machine license in 2012.

The company, which operates lotteries in Victoria, Tasmania, Northern Territory, the Australian Capital Territory and Queensland, projects that the NSW Lotteries purchase, will contribute A$120 million of operating earnings by 2014.

The deal allows Tatts to have an exclusive 40-year license to conduct public lotteries, excluding Keno, throughout the state.

ASX Movers

Tatts Group Limited led the decliners in the S&P ASX 200 index with a loss of 7.2% followed by losses in Carnarvon Petroleum Limited of 5.2%, in Gunns Limited of 5.0%, in Hastie Group Limited 3.9% and in Henderson Group Plc 3.2%.

Energy World Corporation Limited led gainers in the S&P ASX 200 index with a rise of 11.1% followed by gains in Panoramic Resources Limited 7.3%, in BlueScope Steel Limited of 4.4% and in Riversdale Mining Limited of 4.2%.

Other Movers

BHP Billiton plc rose 0.2% to A$41.09 after the mining company said oil production has commenced ahead of schedule from the BHP Billiton operated Pyrenees project, offshore Western Australia.

Lihir Gold Limited added 1.4% to A$2.78 after the gold mining company Chief Executive Phil Baker expressed positive comments at the BMO Capital Markets 2010 Global Metals and Mining Conference in Florida.

Nufarm Limited declined 2.8% to A$9.47 after the supplier of farm chemicals reported 99.28% of proxy votes were cast in favor of allowing Sumitomo Chemical Co. to take a 20% stake in the company.

Rio Tinto Limited the metal and mineral production rose 0.8% to A$72.02.

Tatts Group Limited decreased 7.2% to A$2.30 after the gambling company, NSW Government announced that company is the successful bidder for NSW Lotteries for A$850 million. The transaction to be completed by March will be funded with debt and cash.