RBA says housing market holding up, shares flat: Economy roundup

The head of the Reserve Bank of Australia’s economics division, Anthony Richards, has declared the housing market is faring better than in other nations.

Richards says due to falling interest rates and lower prices, households here are less financially vulnerable in this downturn than others.

“Recent significant falls in the cash rate are having positive effects on the economy and the household sector, and have contributed to a significant improvement in household cashflows and in measures of housing affordability,” Richards told Reuters.

The Australian sharemarket has opened slightly higher today after better-than-expected economic data helped lift Wall Street.  

The Dow Jones industrial average gained 89.84 points, or 1.17% to 7749.81 after new housing and goods data gave hope to investors that the economy may be starting to recover.

In Australia, the benchmark S&P/ASX200 index opened 0.4% higher today, and was up 20.7 points or 0.6% to 3630 at 12.10 AESDT. The dollar has also remained stable at US69 cents.

NAB shares have gained 1.9% to $20.75, while AMP gained 0.2% to $4.82. Westpac jumped 0.3% to $19.68 as Commonwealth Bank shares dropped 0.9% to $35.06.

Pallet manufacturer Brambles has not faired so well following the loss of a major contract with PepsiCo in the US. The company received a “please explain” from the ASX after its shares dropped 11.68% to $4.99 yesterday, despite the company claiming the loss was “not material”.

Today the company’s shares gained 4.2% to $5.20.

Meanwhile, the Australian Competition and Consumer Commission has said it will not oppose the $US19.5 billion investment in Rio Tinto from Chinese group Chinalco.

“The Australian Competition and Consumer Commission will not oppose the proposed acquisition by the Aluminium Corporation of China (Chinalco) of various interests in Rio Tinto as it would be unlikely to result in a substantial lessening of competition,” the ACCC said yesterday.

Chinalco has said the decision is an important step in achieving full regulatory approval. There have been some concerns as to the company’s ability to lower iron ore prices to benefit Chinese steel manufacturers.

“On the basis of information provided to the ACCC during this review and the ACCC’s recent detailed investigation of the proposed acquisition of Rio Tinto by BHP Billiton, the ACCC concluded that Chinalco and Rio Tinto would be unlikely to have the ability to unilaterally decrease global iron ore prices below competitive levels,” the ACCC said.