The Australian dollar sunk to $US0.6985 in offshore trade, its lowest level of a four years time. At 7am (AEDT), the Australian dollar was trading at $US0.7200/05, down 4 per cent from yesterday's close of $US0.7495/98. The Australian dollar has now fallen by 29 per cent since mid-July when it reached a 25-year high of $US0.9849, and has shed 13 per cent in the past week alone.
Most economists are expecting a half percentage point move for this month's RBA interest rate. It would be the first 50 basis point rate cut since April 2001 and more difficult for Australian Dollar to rally.
Crude oil prices dropped to eight-month low below $US90 a barrel today as worsening financial turmoil triggered fears about slowing demand for energy. Prices have slumped almost 40 per cent in three months since they struck record highs of above $US147 in July. New York's main contract, light sweet crude for November, shed $US4.48 to $US89.40 a barrel. The contract also hit a eight-month low point of $US88.89.
Key Economic Facts and Figures
The Reserve Bank of Australia added extra cash to the banking system today in a continuing effort to ease funding pressures in a frozen money market. The RBA added A$1.815 billion in repurchase agreements, above an estimated daily need of A$1.524 billion, effectively adding A$291 million. The cash cushion with the RBA has been around an historically high A$9.5 billion.
The Reserve Bank will probably cut its benchmark interest rate by a half point, the biggest reduction in more than seven years, amid global financial market turmoil, falling consumer spending and slowest growth in home borrowing.
The central bank cut the benchmark rate a month ago after pushing borrowing costs to a 12-year high with a dozen quarter- point increases between May 2002 and March this year.
The Australian Industry Group-Housing Industry Association performance of construction index (PCI) fell 11.3 index points to 31.8 points in September, its weakest reading since the survey was established in September 2005. The index was below the key 50 level, which separates expansion from contraction, for the seventh straight month.
Fletcher Building(NZE:FBU) has entered a conditional agreement to buy Fielders Australia Pty Ltd. Hills Industries (ASX:HIL) will sell its 60 per cent shareholding in Fielders Australia to Fletcher Building. Fielders is owned by Hills Industries Ltd (60 per cent) and FSR Investments Pty Ltd (40 per cent). The transaction is expected to return approximately A$105m in cash to the Hills group.
Commonwealth Bank of Australia Ltd(ASX:CBA) says it has begun exclusive negotiations with HBOS plc(LSE:HBOS) to buy BankWest. The statement followed a news report saying CBA was making a play for BankWest to capitalise on the turmoil surrounding the West Australian-based group's British parent HBOS.
The board of Queensland-based Golden Circle(NSX:GCO) declared a ringing endorsement for a A$288 million takeover bid from the US-owned Heinz(NYSE:HNZ). The A$1.65 a share offered by the local arm of the baked beans peddler is more than 300 per cent higher than the 40c the company's shares last traded on the secondary market, the National Stock Exchange of Australia.
Burswood-based telecommunications investor Cape Range Wireless Ltd(ASX:CAG) will move to full control of a Metro Consolidated Pte Ltd, which holds rights to mine an Indonesian coal project. Today, Cape said it will acquire a 100 per cent interest in Metro for no additional consideration fees, except for the payment of A$5 million worth of Cape shares when a resource of 10 million tonnes is reached.
Important Corporate News
One of the executives brought in to help steer debt-plagued Centro Properties Group(ASX:CNP) through its crisis will step down from the job by the end of this month. Ross Johnston came on board at Centro in March as head of strategy implementation. He has resigned from his position effective by October 31.
SP AusNet(ASX:SPN) today announced the introduction of a distribution reinvestment plan (DRP). The DRP will provide eligible securityholders with a convenient method of reinvesting all or part of their distributions in additional SP AusNet stapled securities. Funds raised by the DRP will be used for capital management and to fund capital expenditure for growth.
H.J. Heinz Company
Golden Circle Ltd.
Fletcher Building Limited
Commonwealth Bank of Australia
Centro Properties Group
Cape Range Limited