RBA unlikely to raise rates, economic outlook stable: Economy Roundup

The chance of another interest rate rise occurring in September appears low, with the Reserve Bank of Australia explaining in its latest minutes that its global outlook remains unchanged.

“Markets (in July) had settled somewhat, but there was still more uncertainty over the global outlook than there had been earlier in the year,” the RBA said in a statement.

“The board therefore judged the existing level of the cash rate as still appropriate, and decided to leave it unchanged for the time being, pending further information.”

Noting improvements in the domestic economy, including CPI data which showed inflation moving into the target 2-3% band, the board also said households have begun to adjust to a more “normalised” interest rate level.

“By May, interest rates on loans to households and businesses had returned to around average levels,” the minutes said.

“In the subsequent two months, with economic growth close to trend and inflation expected to decline to the target range later in the year, the board had felt comfortable with the existing level of interest rates, particularly in an environment where there was a significant degree of market volatility.”

The board also noted that developments in July hadn’t changed its assessment of economic activity, and that “the outlook for economic growth has not changed”.

“Markets had settled somewhat, but there was still more uncertainty over the global outlook than there had been earlier in the year. The Board therefore judged the existing level of the cash rate as still appropriate, and decided to leave it unchanged for the time being, pending further information.”

In Western Australia, oil giant Chevron has discovered what it calls a “most significant” natural gas discovery in the Carnarvon Basin region.

“We expect this discovery to help underpin potential expansion opportunities at the Wheatstone liquefied natural gas hub,” Chevron Asia Pacific exploration and production president, Jim Blackwell said in a statement.

“Adding to our Australian portfolio progresses our long-term plans to build a leading natural gas business in Australia and the Asia-Pacific region.”

OneSteel has recorded a net profit of $258 million in the 12 months to 30 June, up from $230 million last year, although it warns the unbalanced economic recovery will keep margins tight.

“For domestic steel, the factors that led to the stall in recovery over May and June have continued into the current financial year, which is affecting first half profit performance,” OneSteel said in a statement.

“However, we expect volumes to benefit through this financial year from increased infrastructure activity and as confidence levels and economic conditions improve, but with the benefit skewed more to the second half.”

“Overall, the result was acceptable given the challenging external environment,” chief executive Geoff Plummer said in a statement.

Market opens flat on weak Wall Street lead

The Australian sharemarket has opened flat today, following a similar result from Wall Street where investors were disappointed with some fairly flat corporate results.

The benchmark ASX/200 index was up just 16 points or 0.38% to 4455.2 at 12.20 AEST, while the Australian dollar managed to gain ground to US89c after news emerged China has taken Japan’s place as the world’s second largest economy.

Commonwealth Bank shares gained 0.5% to $50.02, while NAB shares rose 1.3% to $23.96. Westpac rose 0.6% to $22.61 as ANZ gained 0.7% to $22.31.

Medical centres operator Primary Health Care has recorded a 21.6% increase in net profit after tax to $132 million, with revenue down to $1.29 billion from 2009’s $1.33 billion.

“Subject to no significant changes in current market conditions, Primary currently would expect to achieve the lower range of its FY2011 earnings guidance of $360 million,” the company said in a statement.

“The under-funding by government has led in FY2010 to reduced access to GP, pathology and healthcare services.”

UGL profit up just 1.5% on falling revenue

UGL has managed to record a 1.5% increase in full-year profit to $144.5 million in the year to 30 June, with underlying profit up by 1% to $151.1 million. However, revenue has fallen by 11.9% to $4.19 billion.

“Our essential services focus continues to deliver healthy forward workloads, visibility and stability across the group,” managing director Richard Leupen said, noting economic conditions remain volatile.

On Wall Street, stocks have remained flat as investors back away due to a number of disappointing corporate results. The Dow Jones Industrial Average was down 1.14 points or 0.01% to 10,302.1