Rip Curl acquires OzMosis chain: Midday Roundup

Surfing chain Rip Curl has acquired Victorian surf retail chain Ozmosis, the company announced in a statement this morning.

The acquisition comes after Rip Curl purchased the Waves retail chain in Western Australia last year.

The company said it was attracted to the quality of the Ozmosis stores.

“We look forward to working closely with the team at Ozmosis to further develop the surf and action sports retail market in Victoria,” Rip Curl Asia Pacific chief executive Steven Kay said.

“Melbourne is one of the great epicentres of youth culture and Victoria is home to some of the best surfing, skiing and snowboarding in the country, and Rip Curl wants to provide its customers with better access to the lifestyle products they need.”

RBA flags further rate rises as inflation heats up

The Reserve Bank has reiterated its forecast for trend or above trend growth for the Australian economy over the medium-term, suggesting further rate rises are on the way despite the cooling effect of the high Aussie dollar and higher levels of savings.

In its statement on monetary policy, the central bank said underlying inflation is expected to increase gradually over the next few years, taking it to the top of its 2-3% target band.

“While the recent appreciation of the exchange rate and a continuation of the relatively high saving ratio by households will help to offset some of the inflationary pressures associated with the resources boom, underlying inflation is expected to be in the top part of the target band over much of the next couple of years.”

“By the end of the forecast horizon, underlying inflation is forecast to be above 3% based on the technical assumption that the cash rate moves broadly in line with market pricing at the time this Statement was finalised.”

“Headline inflation is forecast to remain above underlying inflation – and above 3% – for the remainder of 2011, largely due to the increases in fruit and vegetable prices. It is then forecast to be below underlying inflation for much of 2012, as fruit and vegetable prices normalise.”

It added: “The central outlook sketched above suggests that further tightening of monetary policy is likely to be required at some point for inflation to remain consistent with the 2–3& medium-term target.”

The RBA also said while growth is expected to above 4% through 2011, large differences between sectors will continue.

“Some areas of the economy are expected to be very strong, while conditions will be quite difficult in others due to the appreciation of the exchange rate and subdued consumer spending,” it said.

“This challenging environment for parts of the economy reflects the very large changes in relative prices that are occurring at a time when spare capacity in the overall economy is relatively limited.”

Australian dollar buoyed by RBA

The Australian dollar jumped more than 1% on the news to $US1.071 at the prospect of further rate rises, after recording a fall overnight on tumbling commodity prices, putting an end to a stellar run in which the currency topped $US1.10.

“The more than four cent fall from glory seemed to be initially triggered by the hike in silver margin requirements, and the broader market has been in selling mode ever since,” CMC Markets senior FX dealer Tim Waterer says.

“Looking ahead for the AUD, if we get a poor US jobs number tonight and the market further questions the state of the global recovery, support at 1.0450 could be tested in the coming days.”

“However if market nerves settle somewhat and gold reclaims the $1,500 mark, then the AUD should move back past 1.07. As such, an encouraging US jobs figure tonight could potentially put a floor under the current correction phase,” Waterer says.

“The RBA Monetary Policy statement this morning was a bit of rare bright news for the AUD this week, pushing it one third of a cent higher. Upgraded inflation forecasts bring second half year interest rate hike back into the picture.

“The AUD moved from 1.0650 to 1.0685 shortly after the statement, and by midday it was now over a cent higher than its lows late in the prior New York session.”

Construction activity falls during April

Activity in the Australian construction industry dropped for an eleventh consecutive month, according to the latest Australian Industry Group-Housing Industry Association Performance of Construction Index.

The index fell by 1.5 points to 37.9 points, well below the 50-point level separating expansion from contraction.

The report claims that “weak levels of new work, strong competition to secure contracts and caution amongst investors contributed to the poor reading”.

All of the sub-sectors contained within the report contracted, with the housing sub sector recording the largest fall of 2.3 points to 38.4.

Australian Industry Group director of public policy Peter Burn said in a statement the result means the industry will be negatively hit by interest rate rises.

“Ongoing business and household caution remains an impediment to sustained recovery both in the residential construction sectors and in commercial construction,” he said.

“The outlook across the four sub-sectors remains poor with new orders continuing to fall in each sub-sector.”

Shares lower after weak Wall Street result

The Australian sharemarket has opened lower this morning after a weak night on Wall Street, where lower commodity prices delivered poor returns for investors.

The benchmark S&P/ASX200 index was down seven points or 0.16% to 4746.1 at 12.00 AEST.

AMP shares rose 0.36% to $5.23, while Commonwealth Bank shares gained 0.3% to $52.83. Westpac shares rose 0.25% to $23.79 as ANZ gained 0.17% to $23.63.

In the United States, the Dow Jones Industrial Average fell by 139 points or 1.10% to 12,584.17.