(eToro Blog) Australia reported that home loan approvals rose in November as the Reserve Bank of Australia delivered its first rate cut in 2011. Loans for houses and apartments rose 1.4%, beating analyst expectations of a 1% growth. First time home buyers rushed into buy homes and the report shows that they accounted for 20% of home loans in November. The report showed that the lending to owner occupied homes rose 2.2% and that lending to investors rose 1.8%. The Reserve Bank of Australia was concerned about the inventory of unsold homes and general construction activity amid a crisis in Europe. This prompted the RBA to cut rates by 25 basis points in November and another 25 basis points in December. Soon after the RBA decision, banks in Australia cut rates on home loans.
While the rate cuts helped boost home sales as intended, we are yet to still see positive effects in the labor markets. According to a survey on job ads conducted by the ANZ bank, job ads fell 0.9% in December. In November, the survey posted a 0.1% rise in job ads. On an annualized basis, ads were down 2.6% making it a worrisome trend. The Australian government will release the official employment report later this week which will shed further light on the labor market. Most market participants expect the RBA to deliver another rate cut at the February policy meeting to boost the economy.
Asian markets declined on the first day of trading after the credit rating agency Standard and Poor’s action on European countries. Standard and Poor’s downgraded France and Austria from AAA and also downgraded Italy, Spain, Malta, Slovenia, Slovakia, Portugal and Cyprus. The Japanese Nikkei dropped 122 points, the Hang Seng dropped 198 points, the Shanghai index dropped 24 points and the Australian S&P ASX dropped 47 points. Traders on OpenBook are primarily short on AUDUSD with average limits at 1.0195 and stops at 1.0390.
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