The local share market had a positive lead from offshore
markets overnight but managed only a modest gain by close. As
expected the Reserve Bank of Australia left the official cash
rate on hold at 4.25pct for the third month in a row, despite
official data released today showing retail spending remains
sluggish. By close, the All Ordinaries Index (XAO) was up just
8pts or 0.2pct to 4424.4.
Financial stocks added 0.1pct with shares in Macquarie Group
(MQG) firmer by 1pct to $29.15.
Among the mining stocks, Rio Tinto (
) firmed by 0.9pct to $66.79 thanks to firmer commodity prices.
Mining and mining consumables business Onesteel (OST) announced a
name change to the market, to reflect the fact its business is no
longer solely focused on the domestic steel industry. OST will
hold an Extraordinary General Meeting on May 8, and if the name
change is approved, will go by Arrium Limited from Monday 2nd
July. Onesteel's new ASX code listing has not been formally
announced. The company, which has been struggling financially,
will spend about $1 million in the rebranding exercise. OST today
closed up 0.4pct to $1.27.
Franklins owner and wholesale grocer Metcash (
) came out of a trading halt today, announcing a $43 million
restructure which includes the loss of 478 jobs. Metcash will
also close 15 regional Campbell's Cash and Carry stores as it
tries to remain competitive in what it labelled ongoing difficult
trading conditions. MTS shares fell 4.7pct today to $4.10 while
Woolworths added 0.2pct to $25.70 and Coles owner Wesfarmers (
) was firmer by 0.3pct to $29.99.
Official figures released today prove Australians remain
reluctant to part with their cash. Retail spending rose by just
0.2pct in February after rising by 0.3pct in January. In the past
four months total retail activity has increased by just 0.4pct.
Annual spending growth totalled just two percent. Across the
states, Queensland and Western Australia led the gains while
significant weakness was recorded in NSW and Victoria. Excluding
Queensland and Western Australia retail sales grew by just 0.9pct
in annual terms. Non-food retailing was flat in February and up
just 1.6pct over the year. Sales by chain stores and other large
retailers rose by 0.3pct in seasonally adjusted terms in
February. In annual terms sales at chain stores were up 1.9pct on
a year ago, marking the weakest annual growth rate in 15
Despite the sluggish retail sales the RBA left rates on hold
today. The Reserve Bank Board has left the cash rate at 4.25 per
cent for the third month after previously electing to cut rates
at both the November and December meetings, each by 25 basis
points. (The Reserve Bank Board doesn't meet in January). The
Reserve Bank had previously lifted rates seven times from October
2009 to November 2010 - a total of 1.75 percentage points, from
3pct to 4.75pct.
In the last rate-cutting cycle the cash rate fell to a low of
3pct in April 2009. In the previous rate-cutting cycle the cash
rate fell to 4.25pct in December 2001. In the two previous
rate-cutting cycles, the cash rate fell to lows of 4.75pct.
The Reserve Bank now looks more closely at the variable
housing rate to gauge how close rates are to "normal". Currently
the average bank variable housing rate stands at 7.40 per cent,
broadly in line with the long-term average or "normal" rate of
The Australian dollar fell slightly following the interest
rate decision and at 4pm AEDT was worth US104.02c, £0.6486 and
On the market overall, a total of 2.1 billion shares were
traded, worth $4.38 billion. 515 were up, 480 were down and 414
At 4.15pm AEDT On the ASX24, the share price futures contract
was at 4343, up 10pts.
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