The first effects of yesterday’s higher than expected inflation result are already being felt, with the Australian dollar significantly higher against the US today.
The Australian dollar jumped to more than US95c following yesterday’s announcement, and although it has came back a bit since then – at 11.15pm today it is trading at US94.56c – it looks destined to stay at relatively high levels in the short term.
On the markets today, selling in resources and financial stocks has pushed the major indices lower today, with the S&P/ASX200 down 1.4% on yesterday’s close to 5573.3 at 11.15pm.
A weak gold price overnight is a key reason for the fall, with selling in gold miners such as Newcrest (down 4.34%) and Lihir Gold (down 2.82%).
ANZ Bank has also reversed some of the gains it achieved off the back of its profit announcement this week. At 11pm its share price was down 1.8% on yesterday’s close to $21.63.
And two starkly different profit results in the US yesterday illustrate that Australia is not the only developed nation to have something of a two-tone economy – although there the division is more a matter of demography than geography.
Starbucks coffee chain, a big provider of caffeine to the US masses, yesterday announced its profit estimate for the second quarter of 2008 is 15c, well below the 21c expected, because of what it described as “the weakest economic environment” in its history.
By contrast, glamour IT business Apple reported a 36% increase in its second quarter 2008 profit to $US1.05 billion. A tale of two economies indeed.