Sydney, Sept 3, 2008 (ABN Newswire) - Yesterday, the Australian share market closed slightly weaker despite a cut to official interest rates and a drop in the oil price. The benchmark S&P/ASX200 was down 2.3 points, or 0.04 per cent, to 5,116, while the broader All Ordinaries fell five points, or 0.1 per cent, to 5,195. The Australian stock market may continue the decline today with US equities and commodities down overnight.

At 0748 AEST on the Sydney Futures Exchange, the September share price index futures contract was down 31 points at 5,110.

Analysts said the RBA rate cut was widely anticipated and people expects more than one cut before regain confidence.

Oil prices have plunged to the lowest level in five months, falling to within sight of $100 a barrel on signs that Hurricane Gustav only grazed US energy infrastructure in the Gulf of Mexico. Light, sweet crude for October delivery fell $6.83 to $108.63 a barrel on the New York Mercantile Exchange.

Today the Australian dollar has opened at its lowest level in eleven months as the central bank's interest rate cut and falling prices of commodities hurt the currency. At 7am AEST, the dollar was trading at $US0.8378/81, down from yesterday's close of 0.8398/02.

Key Economic Facts and Figures

Interest rates have finally started moving lower, but economists raised questions how quickly the Reserve Bank of Australia will deliver further cuts. The RBA did not tipped an October rate cut and economists anticipated that November was the most likely date for the next movement down.

The total number of Australian houses and apartments approved for construction fell a seasonally adjusted 2.3% in July from June, the Australian Bureau of Statistics said Tuesday. Economists had expected on average that total residential building approvals rose 0.3% from the month before. Growth in private house building approvals fell for a third straight month in July as a result of high interest rates and poor consumer sentiment. The RBA cut the official cash rate by 0.25 percentage points to 7 per cent, shaving A$52 off monthly repayments on a A$300,000 mortgage and A$139 a month on a A$800,000 mortgage.

The Australian Industry Group and Commonwealth Bank release the Australian Performance of Services Index (Australian PSI) for August. The Australian Bureau of Statistics releases the national accounts data for the June quarter.

M&A News

European Union antitrust regulators say they have put on hold an antitrust probe into miner BHP Billiton's (ASX:BHP) bid for rival Rio Tinto Inc (ASX:RIO) because the companies have not provided necessary information. Officials said they would set a new deadline once they had received the information they were looking for.

Commonwealth Bank of Australia (ASX:CBA) has applied to raise its stake in China's Jinan City Commercial Bank to the maximum allowed 20 percent level. CBA acquired an 11 percent strategic stake in the city bank in Shandong in 2004 for 143 million yuan ($20.91 million), with an option to increase its investment later.

Australian engineering and construction group Downer EDI Ltd. (ASX:DOW) said Wednesday it agreed to buy New Zealand infrastructure maintenance and management business Excell Corp. in conjunction with waste management group Transpacific Industries Group Ltd. (ASX:TPI). Downer said it expects to purchase 75% of Excell's operations.

Australia and New Zealand Banking Group (ASX:ANZ) is likely to increase its stake in margin broker Tricom as it seeks to stem loan losses, days after Denmark's Saxo Bank broke off talks to rescue Tricom. Analysts said ANZ could convert around A$80 million it is owed by Tricom into equity in the company, a move they said would be positive. An ANZ spokeswoman said discussions with Tricom were progressing satisfactorily at this stage.

Important Corporate News

St George Bank (ASX:SGB) is planning a bigger-than-expected cut in home loan rates but will hold off passing this on to its 320,000 affected customers for more than three weeks. St George has delayed its 0.3 percentage point cut until September 29 in order to take advantage of an anticipated fall in short-term money market interest rates.

Australia's only publicly listed health insurer NIB (ASX:NHF) has denied it is in financial trouble, despite axing jobs just days after posting a 99 per cent profit slump. The insurer's annual profit dropped A$52 million to just A$404,000 for the 12 months to June. The company recently closed four branches and former company secretary David Lethbridge resigned yesterday. Yesterday its job cuts will affect 22 clerical and management staff.