The market took another hammering, the dollar soars and business just keeps on spending, as an interest rate hike looks more likely.
Interest rate rises have not deterred business from spending big on buildings and equipment. Private new capital spending jumped a seasonally-adjusted 5.1% in the December quarter to $20.68 billion in the fourth quarter of 2007 up from $19.68 billion in the third quarter, shows the Australian Bureau of Statistics. Economists had forecast a 3.1% increase.
The investment boom that looks set to continue means an interest rate rise next week is looking like it’s on the cards, which in turn spooked the market, driving it down 1.8% on morning trade after three straight days of gains.
Meanwhile the Australian dollar rose to a 24-year high to US0.9450/52 against the US dollar.