Some more good news for the economy has arrived. The Reserve Bank of Australia has released the minutes of its last monthly meeting, in which it wrote that fiscal stimulus provided by the Government has helped boost household demand and confidence.
“Members observed that the early and substantial easing of both monetary and fiscal policy had been effective in supporting demand, which, if anything, had been more resilient than expected,” the minutes showed.
The minutes also noted China’s economic status as a good reason for optimism, while the board also noted that a further rate cut could be made in the next few months.
“Members noted that the current inflation outlook afforded scope for some further easing of monetary policy, if that were needed to give further support to demand at a later stage.”
The board also noted that household spending has remained resilient, consumer confidence has risen and that sales of cars to businesses have increased.
The Australian share market has hit an eight-month high, opening 0.7% higher after positive leads overnight from Wall Street where investors are expecting healthy corporate results, but has since lost some ground.
The benchmark S&P/ASX200 index was down 5 points or 0.12% to 4045.3 at 12.10 AEST. The Australian dollar also opened higher, gaining ground to US81c.
Commonwealth Bank shares were down 0.6% to $39.67, with NAB shares also down by 0.6% to $23.74. ANZ fell by 0.4% to $16.80 as Westpac lost 1.1% to $20.02.
Harvey Norman reports higher sales, OZ Minerals on track
The retail sector has been given a boost, with department store retailer Harvey Norman reporting an increase in full-year sales of 3.8%.
The retailer said sales grew from $5.81 billion to $6.03 billion, and that sales grew by 1.4% on a like-for-like basis, but warned of pressure on margins for the year ahead.
“Given the current macroeconomic conditions, retail margins continue to be under pressure,” Harvey Norman chief financial officer Chris Mentis said in a statement.
Mining giant OZ Minerals has said its contained copper production at its Prominent Hill mine for the quarter ending in June was 27,159 tonnes, while gold was 18,351 ounces.
It also said that production at the mine is on schedule to meet previous guidance of 85,000 to 100,000 tonnes of copper and 60,000-70,000 ounces of gold.
Government sticks to unemployment figures, US shares rise on CIT survival
Meanwhile, despite a new Access Economics report that claims unemployment will only reach a high of 7.5%, the Federal Government is sticking to its peak figure of 8.5% for the next financial year.
“The Government will not be revising the forecast until… MYEFO,” Swan told ABC Radio today, referring to the Mid-Year Economic and Fiscal Outlook.
Overseas, stocks in the US have experienced high gains, moving the S&P 500 an eight-month high, after news broke that CIT has avoided bankruptcy.
The Dow Jones industrial average rose 104.21 points, or 1.1%, to 8,848.15. The S&P 500 Index gained 10.75 points, or 1.1%, to 951.13.
Also in the US, President Barack Obama has said Wall Street banks and financial institutions have not displayed enough remorse about helping cause the global financial crisis.
“The problem that I’ve seen, at least, is you don’t get a sense that folks on Wall Street feel any remorse for taking all these risks,” Obama said in a television interview.
“You don’t get a sense that there’s been a change of culture and behaviour as a consequence of what has happened. And that’s why the financial regulatory reform proposals that we put forward are so important.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
