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Market Update

Australian Rates on Hold for 5th Month, Ashley Services in Board Turmoil

Author: Marcus Jacob
Last Update: 3:52 AM ET October 06 2015

5:30 PM Sydney, Australia Australian market indexes trimmed gains after the RBA kept interest rate unrevised for the fifth month in a row. Aussie dollar gained for the third day after the central bank gave no indication of additional monetary easing. Ashley Services plunged on boar turmoil.

Australian stocks opened higher but the market advance was muted after the Reserve Bank of Australia left its reference rate on hold for the fifth month in a row.

The Aussie dollar extended 3-day gain after the RBA gave no indication of additional monetary easing bias.

The seasonally adjusted merchandise trade deficit in August widened to $3.10 billion from $2.79 in July but narrowed form $3.35 in June, the Australian Bureau of Statistics said.

Exports in the month slipped 0.5% from the previous month to $26.51 billion while import increased 0.6% to $29.60 billion compared to $29.43 billion in July.

In a monetary policy meeting, the policy board decided to leave the cash rate unchanged at 2%, the Reserve Bank of Australia reported.

The central bank had lowered reference rate by 25 basis points each in February and May, as the economy expanded 0.2% in the second-quarter following the increase of 0.9% in the first-quarter.

Australian dollar closed at 71.27 U.S. cents and in stock trading turnover jumped to 705 billion shares worth $4.8 billion.

At close, the ASX 200 Index gained 16.90 or 0.3% to 5,167.40 and the broader All Ordinaries Index increased 14.90 to 5,199.

In commodities trading, gold rose US$1 to US$1,136 an ounce and Brent crude future for immediate month delivery closed unchanged at US$49.25 a barrel.

Australian Stock Movers

Ashley Services Group Ltd tumbled 17.1% to 31.5 cents after the recruitment firm lowered operating profit forecast to decline 10% from its previous estimate.

The company also announced several board changes and chairman Peter Turner and former Labor Party leader Simon Crean and an independent director Vincent Fayad have resigned from the board.

The company appointed accountant Ian Pratt as its new chairman.

The company is undergoing through an upheaval after the latest profit downgrade and challenging revenue model only after going public 14 months ago.

The stock was priced at $1.66 a share in August 2014,

The company also said it will undertake a full strategic review and evaluate its business operations after the government has stepped scrutiny of the quality of educational services provided.

Ashley warned that the net income is likely to be 10% lower from the previous earnings, which were 33% lower than expected according to the estimate released at the time of going public.

Aquarius Platinum Limited surged 10% to 16.5 cents after the South Africa-focused gold miner received an offer from Sibanye Gold Ltd for $294 million in cash.

Mobile Embrace Ltd plummeted 15.6% to 19 cents after the mobile payments and marketing services provider received a claim against one of its subsidiaries GBD Ventures Pty Limited for about $4 million.

The company plans to file an appeal and file for its claim.

Origin Energy Ltd plunged 8.8% after a trading halt to $5.56 the oil and gas producer raise $2.5 billion from institutional investors.

Veda Group Ltd increased 1.5% to $2.69 after the credit information provider said it received a revised takeover proposal from the U.S.-based rival Equifax Inc for $2.5 billion in cash from the offer of $1.7 billion on September 17.

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