RBA say economy improving but uncertainty remains, Housing stats fall 4.1%: Economy Roundup

The Reserve Bank says economic conditions are improving, but uncertainty about the domestic and international outlook convinced the board to keep rates on hold earlier this month.

In its minutes for the September board meeting, the bank said economic conditions were beginning to promote a “less expansionary policy stance” and higher interest rates, although it says it remains worried about lifting rates too early.

The RBA said the global economy appeared to be on a “sustained, if modest, recovery path” although it was “still too soon to be confident of this assessment”.

Housing stats drop

Data from the Australian Bureau of Statistics indicates that the housing market remains under pressure, with housing stats falling 4.1% in the June quarter.

The slump follows a fall of 6.3% in the March quarter and represents a 23% fall from the corresponding period last year.

Shares steady, all eyes on Telstra

The Australian sharemarket has been rocked by the news that the Federal Government will effectively force Telstra for separate its retail and wholesale businesses. Telstra shares have dropped 4.3% in morning trade to be at $3.11.

Overall, the benchmark ASX-S&P index rose 20.9 points or 0.5% to be at 4552 points at 12:10 AEST.

News Corp was the big winner of the morning, with its shares jumping 3.2% to $16.19. It owns a 25% stake in Foxtel and could be a possible bidder if Telstra is forced to sell its 50% stake in pay TV company Foxtel.

Overseas, Wall Street closed firmer as optimism about an economic recovery overshadowed concerns about a developing trade dispute between the United States and China. Both countries have placed restrictions on each others imports in the last few days.

The Dow Jones Industrial Average rose 0.22%, while the Standard and Poor’s 500 Index was 0.63% higher.

Obama calls for reform

As foreshadowed yesterday, President Barack Obama delivered a stern warning to Wall Street on the anniversary of the Lehman Brothers collapse.

“Normalcy cannot lead to complacency,” he said at the historic Federal Hall in the heart of Wall Street.

“Unfortunately, there are some in the financial industry who are misreading this moment. Instead of learning the lessons of Lehman and the crisis from which we’re still recovering, they’re choosing to ignore those lessons.”

The G20 meeting next week in the US is expected to consider new reforms.