Homeowners get Christmas bonus

ArticleData Array ( [Article] => Array ( [article_id] => 1001248 [headline] => Homeowners get Christmas bonus [abstract] => The Reserve Bank of Australia has cut interest rates by a full 100 basis points, bringing the cash rate to 4.25 per cent. [keywords] => rba, interest rates, rates, money, finance, reserve bank, bank, mortgage [content] =>

The Reserve Bank of Australia (RBA) has cut interest rates by 100 basis points, bringing the cash rate to 4.25 per cent.

The move follows severe global economic downturn and a slowing Australian economy.

Shortly after the rate decision, Federal Treasurer Wayne Swan announced in parliament that the Commonwealth Bank would pass on the full 1 per cent rate cut.

 The bigger than expected cut by the RBA is now the lowest in more than six years.

Last month the RBA made a similar move, cutting interest rates by 75 basis points.

Coalition MPs have called on the big banks to pass on today's entire cut to home owners.

Opposition frontbencher Christopher Pyne urged the banks to show some pre-Christmas spirit.

"Banks should pass on the full rate cut, whatever it is, to consumers," he told reporters.

Earlier, an investment specialist called on the RBA to cut rates by up to two per centage points, to avoid an economic train wreck.

The boss of FIIG Securities Jim Stening says the risk of overstimulating the economy pales in comparison to what would happen if the RBA cuts rates too slowly, as our major trading partners go into recession.

Meanwhile lower interest rates and falling petrol prices have lured consumers back to the shops, spending $18.4 billion in October.

Retail spending rose by a seasonally-adjusted 0.7 per cent in October compared with the previous month, Australian Bureau of Statistics (ABS) data released on Tuesday shows.
   
Tuesday's data takes into account the 125 basis points worth of cuts by the RBA in September and October.

The central bank cut the rate by a further 75 basis points in November.

There was also brighter news on Australia's international trade position with the current account deficit narrowing to $9.74 billion in the September quarter, from $14.04 billion in the
previous quarter.

The data feeds into the September quarter gross domestic product which is due for release on Wednesday.

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The Australian share market closed weaker on subdued trading despite a rally on Wall Street and expectations the Reserve Bank of Australia will cut interest rates this week.
 
Weaker resource and banking stocks weighed heavily on the local bourse.

At 1615 AEDT, the benchmark S&P/ASX200 index was 61.3 points or 1.64 per cent into negative territory at 3681.2, while the broader All Ordinaries had lost 53.7 points or 1.46 per cent, at 3619.

On the Sydney Futures Exchange, the December share price index futures contract eased 28 points to 3703 points on volume of 21,031 contracts.

"Our market has been marked back by the strong end to last week, said Shaw Stockbroking head dealer Jamie Spiteri.

"Obviously the US was fairly quiet toward the end of last week, and therefore there was a reduction in activity across most global markets."

A shortened session on Wall Street after Thursday's Thanksgiving holiday had the Dow Jones Industrial Average rally 102.43, or 1.17 per cent, to close at 8,829.04 points - the fifth consecutive gain for blue chips.
 
"Rio Tinto is noticeably weaker and BHP is drifting back," Mr Spiteri said.

Rio Tinto sank by $3.90, or 8.37 per cent, to $42.70, while BHP Billiton backtracked $1.10, or 3.55 per cent, to $29.90.

By contrast, Fortescue Metals Group spiked 44 cents, or 21.36 per, cent to $2.50 on speculation that BHP Billiton may make a takeover bid after abandoning its mega-merger with Rio Tinto Ltd last week.
 
After receiving a speeding ticket from the Australian Securities Exchange, Fortescue said it was not aware of any information that could explain the share price movement.

Banks also lost ground, falling at least two per cent across the sector by 1615 AEDT before Tuesday's interest rate announcement by the Reserve Bank of Australia.

Economists forecast the central bank would cut the interest rate by between 100 and 125 basis points, Mr Spiteri said.

Westpac finished 95 cents, or 5.31 per cent lower, at $16.94 after St George Bank shares were transferred to Westpac as the final implementation in its $15 billion takeover.

Commonwealth Bank lost $1.09 or 3.2 per cent, to $33.00, while National Australia Bank fell 57 cents, or 2.85 per cent, to $19.43 and ANZ Banking Group backtracked 42 cents, or 2.84 per cent, to $14.38.

"We saw fairly strong gains toward the end of last week and some of those gains are being pared back today," Mr Spiteri said.

Insurers were mixed, with QBE gaining 19 cents to $23.94 and Insurance Australia Group easing four cents to $23.94 after saying it will offload 30 per cent of its life insurance asset in Malaysia to UK insurer Friends Provident plc for 170 million Ringgit (RM) ($A71.72 million).

Retailers were also mixed, with David Jones firming seven cents to $2.57, Woolworths gaining 50 cents to $27.30 and The Reject Shop easing one cent to $9.64.

[content_type_id] => 3 [site_name] => World News Australia [articledate] => 1 December 2008 [articletime] => 1 December 2008 [display_order] => 0 ) [1] => Array ( [article_id] => 1001243 [headline] => Miners burnt by market plunge [abstract] => The Australian sharemarket has fallen almost three per cent in just two hours of trade, as mining companies bear the brunt of falling commodity prices.
[content] =>

The Australian sharemarket has fallen almost three per cent in just two hours of trade, as mining companies bear the brunt of falling commodity prices.

The focus this afternoon will be on the Reserve Bank of Australia (RBA), which is expected to cut interest rates again.
   
At 1217 AEDT, the benchmark S&P/ASX200 index was down 101.6 points, or 2.76 per cent, at 3,579.6, while the broader All Ordinaries fell 99.7 points, or 2.67 per cent, to 3,519.3.

On the Sydney Futures Exchange, the December share price index contract was down 89 points at 3,592 on a volume of 19,375 contracts.

Burrell Stockbroking associate Peter Wright said the local market was performing poorly on the back of a weak performance from
Wall Street.
   
"I saw that figure (the Dow) this morning and I thought - Oh, no. Here we go again," he said.
   
Mr Wright said the expected interest rate cut would do little to counter the falls on the local market.
   
"Markets do anticipate these things, and I think they've priced in 75 basis points.
   
"If we get more there will probably be a sell off as people will interpret that as though we're in a lot more trouble than what we
thought.
   
"It is probably a lose-lose situation for the market in its current mindset."
   
BHP Billiton shares fell $1.92, or 6.42 per cent, to $27.98, and Rio Tinto shares lost $2.70, or 6.32 per cent, to $40.00.
   
In the US on Monday, the panel at the National Bureau of Economic Research confirmed that the economy has been in recession since December 2007.
   
US stocks finished lower, with the Dow Jones industrial average settling down 679.95 points, or 7.7 per cent, at 8,149.09 points.
   
Mr Wright said the panel had essentially redefined what constituted a recession.
   
"At the end of the day you can debate the semantics of it but the traditional metric for defining a recession has not been achieved (two consecutive quarters of GDP contraction).

"I was a bit perplexed by the markets reaction to that but that's the times we live in - any kind of negative news is just seized upon."

The banks were lower. Commonwealth Bank fell $1.02 to $31.98, National Australia Bank dropped 34 cents to $19.09, ANZ declined 24 cents to $14.14 and Westpac was down 37 cents at $16.57.

The major energy stocks also were in the red.

Australia's second biggest oil and gas producer, Woodside Petroleum, was down $2.27, or 6.27 per cent, at $33.93, Santos dropped 33 cents, or 2.29 per cent, to $14.06 and Oil Search sank 29 cents, or 6.24 per cent, to $4.36.
   
Fairfax Media fell 6.5 cents, or 4.56 per cent, to $1.36, News Corp lost 20 cents, or 1.65 per cent, to $11.90, while its non-voting scrip was down 34 cents at $11.41.

Grocery and liquor merchant Metcash has posted a 7.2 per cent fall in first half profit after recording a one-off cost related to the termination of a hedging position.

Metcash was steady at $4.00. Harvey Norman Holdings gained 10 cents to $2.25 after it reported that sales for the four weeks ended November 30 rose by 0.5 per cent, from the corresponding period last year.

Other major retailers were mixed. Woolworths lost 46 cents to $26.84, Wesfarmers fell 57 cents to $18.37, while upmarket retailer David Jones was up 13 cents at $2.70.
 

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