Asian stocks lower for a second day; Australian central bank keeps rates on hold
City Index March 6, 2012 10:30 AM
<p>Regional stocks fell for a second day, led by raw-material producers, and the Japanese Yen strengthened on concern global economic growth is moderating. The MSCI Asia […]</p>
Regional stocks fell for a second day, led by raw-material producers, and the Japanese Yen strengthened on concern global economic growth is moderating. The MSCI Asia Pacific Index shed 0.8% going into noon during Tokyo trading hours. Elsewhere, the Hang Seng China Enterprises Index sank 1.4% and Standard & Poor’s 500 Index futures lost 0.2%. In commodities, gold was down slightly to US$1700/oz while silver continued to decline, last trading at US$33.82/oz. Copper was pointing for moderate declines near US$3.83/lb – still a respectable level given 2011 lows.
In regional economic news, The Reserve Bank of Australia (RBA) maintains rates at 4.25%, as expected. The decision to keep rates on hold is a continuation of the “flexibility approach” we wrote about last month. The RBA has the luxury to sit back, wait and evaluate the performance of the domestic economy on merit. It’s in no immediate rush to do anything, perhaps waiting to see what GDP and employment numbers print at tomorrow and Thursday. The most important points to come out of the decision was not the actual rate itself but the admission that despite recent rises by banks, out of RBA movements, average lending rates remain close to medium term averages. This shows that the RBA is not overly concerned about the bank’s moves last month and thinks perhaps pricing might improve as financial pressures on banks in Europe start to moderate. The Australian dollar last traded at 1.0604 against the US dollar, at its intra-day lows, with support at around 1.0430 should 1.0615 levels not hold.
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