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Industry Market Wrap

Last week the Reserve Bank decided to leave interest rates on hold after slashing the official cash rate by 4 percentage points since September last year. Most economists and the financial markets believe the official cash rate will fall further from its current level of 3.25%. The ASX futures market suggests the cash rate will bottom around 2.2 percent in September or October this year.

The hold on interest rate cuts was a bold move by the RBA, with data released the following day showing the nation’s economy had slipped into reverse over the December quarter; the first quarterly contraction in eight years. Annual growth was 0.3 percent. Despite the negative quarterly result, the Australian economy is performing better than most other industrialised nations. The US economy contracted by 6.2 per cent over 2008, Japan’s economy wound back by an annualised 12.7 per cent and the UK economy was 1.9 per cent smaller from a year ago.
 
Advertised residential property listings in the market place continued the trend of the last few weeks, levelling at approximately 10,500 new listings each week (1,800 below the 12 month average) and 118,500 total listings (11,500 below the 12 month average).

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