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Market Update

Australian Rates on Hold, Current Account Deficit Widens

Author: Marcus Jacob
Last Update: 9:11 AM ET September 02 2014

5:00 PM Sydney, Australia Reserve Bank of Australia held interest rate at the level maintained since thirteen months and estimated low interest rates until next year. Australian current account deficit soared to $13.7 billion in June quarter and building approvals increased 2.5% in July on a monthly basis.

Australian market indexes closed higher and investors digested a barrage of economic reports.

The Reserve Bank of Australia decided to maintain its record low interest rate and retained its cash rate at 2.5% as kept at the level since August 2013.

The monetary policy committee estimated interest rates are expected to stay low until next year and inflation is forecasted stay between 2% to 3% target for the next two years.

The Australian Bureau of Statistics reported the current account deficit in the second-quarter to June widened to $13.7 billion from $7.8 billion in the first-quarter.

The statistical agency said total exports in the second quarter plunged 7% while imports rose 1%.

In a separate report the bureau reported the number of building approvals in July climbed 9.4% from a year ago month. Home approvals surged 14% and other residential structures approval increased 6.3%.

On a monthly basis, building approvals in July increased 2.5% followed by 3.8% decrease in June.

The Australian Bureau of Statistics is scheduled to publish its second quarter gross domestic products data tomorrow and the GDP is expected to fall 0.4% on a sequential basis.

Australian dollar closed at 92.90 U.S. cents and in stock trading turnover increased to 611 million shares worth $3.79 billion.

ASX 200 index jumped 28.70 or 0.5% to 5,658.50 and the broader All Ordinaries index increased 27.60 to 5,656.90.

Stocks in Review

Aristocrat Leisure Limited increased 1.3% to $5.47 after the gaming solution provider agreed to sell its Aristocrat Lotteries to U.K.-based online gaming and sports betting software provider Playtech Plc for 10.5 million or about $14.8 million.

Downer EDI Limited gained 0.6% to $4.84 after the engineering construction company secured a contract for Chevron-operated Gorgon Project in Western Australia valued about $170 million.

Seven West Media Ltd slipped 1.3% to $1.84 after the diversified media company signed a long-term agreement with Magic Millions Sales Pty Ltd. for broadcasting rights of most of top sports events in Australia and rights for international events.

Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc