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Market Update

Australian Rates on Hold for 6th Month, Qantas to Split in Two Airlines


Author: Marcus Jacob
ticker.com
Last Update: 9:44 AM ET March 04 2014

5:00 PM Sydney Reserve Bank of Australia left its key lending rate at record low 2.5% for the sixth month in a row. Governor Glenn Stevens also renewed his campaign to lower the Aussie dollar. Government agreed to amend legislation to split Qantas into two carriers.

Australian market indexes rebounded after first hour of weakness and indexes closed up 0.3%.

The market advance was supported by the improving current account deficit, strong housing data and continuation of low interest rate regime.

Reserve Bank of Australia left its key lending rate at record low 2.5% for the sixth month in a row but also hinted that lower dollar will be better for the economy. The move was widely expected by the market.

Current account deficit in the December quarter declined 19% after exports gained and imports declined.

Australian dollar fell to 89.34 U.S. cents and stock market trading turnover slipped to 799 million shares worth $4.3 billion.

The ASX 200 index rose 15.90 to 5,400.20 and the broader All Ordinaries increased 14.30 to 5,411.70.

Stocks in Review

Rio Tinto added 4 cents to $65.83. BHP slid 4 cents to $37.36. Woodside Petroleum Limited fell 16 to $38.16.

Westpac jumped 34 cents to $33.65.

AGL Energy Limited dropped 2.5% to $15.05 after the Australian competition regulator blocked $1.5 billion deal by New South Wales to sell a power company on competition concerns.

The regulator said the state government plan to sell Macquarie Generation to AGL Energy would create difficult competition in the country.

Ausdrill Limited fell 1.1% to 92 cents after the mining and energy service provider said profit in the first-half plunged 70% to $14.5 million as revenue from all key divisions dropped.

Funtastic Limited tumbled 20% to 12 cents after the entertainment products retailer forecasted its earnings in the first-half will be significantly lower due to higher business costs.

The company said its home entertainment distribution Madman business will suffer impairment charges between $22 and $28 million.

Virgin Australia Holdings Ltd jumped 1.4% to 36 cents and Qantas Airways decreased 1.3% to $1.14 after the federal government agreed to amend the legislation to split the national carrier into domestic and international airlines and also move maintenance work offshore.

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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