Inflation gauge suggests rates can remain on hold: Midday Roundup

A private gauge of inflation only rose by a small amount in February, a surprise result given increases in food prices.

The TD-Securities-Melbourne Institute measure of consumer price inflation gained only 0.2% in February, after the 0.4% gain recorded in January.

The TD-MI gauge result bolsters the opinion of economists who believe the RBA will keep interest rates on hold at tomorrow’s board meeting.

Annette Beacher, head of Asia-Pacific research at TD Securities, said in a statement the result gives good reason to believe rates will remain low. “We expect the Bank to signal that it can comfortably remain on the sidelines for several months,” she said.

However, it is the outlook for inflation that remains key for monetary policy deliberations, and we remain of the view that inflation pressures are set to accelerate into 2012,” she said.

Beacher expects interest rates to rise during the second half of the year.

QR National reports profit for first-half

QR National has recorded a first half-net profit of $277.5 million compared to the $21.2 million loss it recorded in the previous corresponding period.

The company’s shares gained nearly 4% this morning to $3.19 after the announcement was made.

However, the company said it expects coal haulage to be reduced during the rest of the year after the effects of floods and cyclones in Queensland.

“Updated information from customers and further analysis indicates total coal haulage reduction is now estimated to be 25 million tonnes for the financial year 2011,” QR National said.

“Looking forward, it is still unclear when customers will be back at full railings.”

Business investment up, but profits decline

Business inventories rose by a seasonally adjusted 0.7%, according to the latest figures from the Australian Bureau of Statistics.

Gross operating profits, however, fell by a seasonally adjusted 2.8% in the December quarter, while wages and salaries increased by 1.5%.

The ABS noted the impact that natural disasters had on the economy in December.

Shares flat despite positive US lead

The Australian sharemarket has opened lower this morning despite a solid result from the US last week, with investors nervous after the UN Security Council announced sanctions against Libya.

The benchmark S&P/ASX200 index was down 12 points or 0.25% to 4824.5 at 12.10 AEST, while the Australian dollar remained above parity at $US1.01.

AMP shares lost 2.74% to $5.32, while Commonwealth Bank shares dropped 0.3% to $52.93. Westpac lost 0.93% to $23.50 as NAB fell 0.88% to $25.77.

Sigma expects result at top of guidance

Sigma Pharmaceuticals has said it expects full-year earnings to be towards the top of its guidance of between $130-150 million.

“Over the latter part of the fiscal year, trading conditions have been solid and management expect the underlying FY2011 EBIT to be at the higher end of the range,” Sigma said in a statement.

But the company also said that it found some accounting errors in the 2010 results, and these will be need to be fixed.

“As part of the completion of the financial statements for the year ended January 31, 2011, and in response to queries raised by ASIC, Sigma has undertaken a review of the previous accounting treatment of a number of inventory and promotional income transactions accounted for in the 2010 financial statements,” Sigma said.

United Nations imposes sanctions on Libya

The UN Security Council has voted to impose sanctions on Libya in the form of travel bans and frozen assets.

The sanctions come as world leaders have continued to put pressure on leader Muammar Gaddafi to step down, with US president Barack Obama outright calling for his resignation.

“Those who slaughter civilians will be held personally accountable,” US ambassador to the United Nations Susan Rice said after the vote.