12 Jun 2015
- The Australian share market rose this week following the strong lead from US stocks and higher oil prices, which helped to propel the energy sector.
- US stocks rose on the back of strong economic data which showed a turnaround in fortunes from the dismal data in Q1 this year.
- European stocks also pushed higher as investors realised stocks had been oversold in recent weeks, especially given the limited investable alternatives.
- In a closely watched decision, MSCI (the constructors of indices that most global investors follow/benchmark themselves against) decided not to include China A shares (mainland shares) in their indices, but to work closely with China to assist in moving closer to inclusion.
- In local stock news, Woolworths’ grocery operations have announced plans to invest more than $650m in new stores and infrastructure and add more than 2,000 staff over the next three years.
- Rupert Murdoch announced he is stepping down as CEO of Twenty-First Century Fox, although he will remain executive chairman of the firm. His son James will take over the CEO role, whilst Lachlan is expected to be named executive co-chairman.
- The Australian dollar rose against the US dollar as a result of US government bond yields falling further, on renewed investor appetite for low-risk assets.
- World oil prices rose as US oil inventories fell again for the sixth straight week, falling four times more than market estimates suggested. OPEC (the cartel of oil producing countries) reaffirmed steady supply, though some rumours of dissention amongst members have begun to circulate.
- Australia’s unemployment rate has surprisingly fallen to 6%, its lowest level in a year. The move confused most with below trend growth in the economy. However, the upbeat numbers may have been a result of low wages growth, giving greater scope for job hiring by employers. The composition of new jobs was overwhelmed by part-time employment.
- The Reserve Bank of New Zealand unexpectedly cut interest rates by 0.25% to 3.25%, the first cut in four years. They cited concerns regarding the high NZ dollar and falling diary prices, with low levels of inflation. In an environment where most developed countries have rates at 0%, it doesn’t pay to stand out in the crowd (aka Australia and NZ).
- A plethora of US economic data came through this week, mostly all positive. A business optimism index rose to a five month high, whilst job openings rose to record highs.
- US retail sales grew in May from April levels, whilst March and April’s data was revised upwards.
- Our federal politicians are finally starting to see the big picture (i.e. it isn’t all about them) with the Labor Party agreeing with the government to scrap the increase to the zero tax threshold and to abolish the dependent spouse tax offset. Let’s hope this sensible approach to policy continues.
- The Greek negotiations continued to remain unresolved… That’s what happens when you have no firm deadline to work to, and two parties who don’t understand that brinkmanship and gamesmanship no longer have a place in politics.
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