8 Sep 2010

Recovery by Australian market

8:19 am on 8 September 2010

The share market in Australia recovered on Tuesday, after political uncertainty and jitters over interest rates kept investors on edge for most of the day.

The Australian 200 index dropped slightly after the Reserve Bank announced a decision to leave the official cash rate on hold at 4.5%.

The move was widely expected, after the latest inflation reading was well within the bank's target band of 2% - 3%.

Many economists now expect the bank to remain on hold until next year

The market dropped again when two independent MPs announced they would back Labor to form a minority government.

The market recovered though, closing just two points lower.

The rate decision and the political announcement sent the Australian dollar lower against the US dollar, but it held relatively steady against the New Zealand dollar.