Shock fall in consumer confidence, even after rate cut: Midday roundup

The latest move to cut rates by the Reserve Bank may not have had an impact on consumer confidence, with Westpac’s latest survey falling 4.1% to 100 points.

The result is a disappointment considering the survey rose to a 19-month high last night, and Westpac chief economist Bill Evans added the result was “very surprising”.

After last month’s rise, “it appeared that sentiment was finally starting to respond to the accumulated series of rate cuts since November last year”.

“With that in mind, it was therefore reasonable to expect that the Index would respond quite positively to the rate cut the Reserve Bank delivered last week”.

Most of the pessimism seems to be associated with the economy, with 60% of respondents recalling news items about economic matters. Next most prominent was interest rates, and budget and taxation.

“Apparently the fall in headline unemployment from 5.4% to 5.2% which was announced during the survey week had limited impact on respondents,” he said.

While the rate cut did affect whether people had a positive view of buying a house or not – that sub-index is at its strongest point since September 2009 – only one of the financial status sub-indexes increased.

The sub-indexes tracking the one and five year outlooks for economic conditions were down 4.3% and 8.9% respectively.

Overall, Evans said this result strengthens the argument for a rate cut in the March quarter.

“The Reserve Bank has two more months to assess the impact of its interest rate moves before its next meeting. Evidence to date is that low rates are not generating much traction with households,” he said.

“Hence there is likely to be a decision to further ease rates in February or March.”

Commercial lending lifts in October

Commercial lending increased during October, according to the latest figures from the Australian Bureau of Statistics.

The figures show total business finance commitments rose 4.8% to a seasonally adjusted $31.699 billion, while total personal lending commitments fell 0.9% to a seasonally adjusted $7.343 billion.

Austereo losses mount

Losses at troubled radio group Austereo are growing, with predictions the company could be losing as much as $150,000 a day.

Since the backlash, the company has now suspended the group’s own Christmas party, and has announced it will be donating profits to charity.

“Yes, we have cancelled the Sydney staff Christmas party due to respect for the current circumstances and all costs that were to be incurred we are donating to Beyond Blue and Lifeline,” a spokesperson for the network told Fairfax.

The company has also announced its profits until the end of the year will be donated to charity.

Shares open at 16-month high

The Australian sharemarket has opened at a 16-month high today following a modest lead from the United States, and confidence from Europe as investors grow more hopeful of a solution.

The benchmark S&P/ASX200 index was up 11 points or 0.3% to 4,587.8 at 12.00 AEST, while in the United States the Dow Jones Industrial Average rose 78 points or 0.6% to 13,248.