1 May 2015
- The local market fell following falls in the US and European markets.
- The big four banks fell sharply following concerns the banking regulator will take quicker than expected action to deal with the threat posed by rampant property price. New figures showed the banks expanded loans for property investments by 10.4% (NAB 13.8%), the highest rate since 2008, and more than the 10% threshold imposed by the regulator.
- European stocks fell sharply during the week following a sharp rally in the EURO against the US dollar after US economic growth figures came in well below expectations. Some softer European corporate earnings results didn’t help.
- In local stock news, BHP Billiton has been hit with a $522m bill that the ATO says it owes for tax avoidance through its Singapore marketing operations. $221m alone is for penalties; BHP is contesting the ATO’s assessment.
- Suncorp Group provided an update on the financial impact of the natural hazard events including the recent NSW storms and ANZAC Day hail. The company responded to 25,000 claims from the two events with a financial impact of $185-205m net of reinsurance.
- Coles has achieved strong growth in its food and liquor business in the third quarter, meeting market expectations. Headline food and liquor sales in the quarter rose 5.4% on the previous corresponding period to $7.1bn.
- Commodity prices rose this week, notably iron ore. BHP indicated they would slow plans to help lift production and Brazilian giant Vale indicated they would be cutting iron ore production. A broader supply response is helping push all commodity prices high as is a softening US dollar.
- The Australian dollar rose against the USD this week hitting a high close to 80c. This was a result of both the AUD rising, following talk that the RBA may leave rates alone at their next meeting, and the US dollar falling, following talk that weak economic data may push the US Reserve Bank’s (the Fed’s) first rate rise out even further.
- Australian online spending jumped 22% to $4.37bn in the first quarter, paving the way for a record year. Retail online spending increased from $3.6bn in the corresponding period a year earlier. Top performing categories were household items and electronics.
- The US economy only grew 0.2% in the first quarter, a sharp decline from the 2.2% growth seen in the previous quarter. The reading was affected by bad weather, falling exports (given the strongly rising US dollar) and a drop in business investment in the face of lower oil prices.
- The Fed kept interest rates unchanged at its policy meeting. It repeated that it will raise rates after a further improvement in labour market conditions and when it is confident that inflation will move back to its 2% target.
- US consumer confidence unexpectedly fell in April, reaching the lowest level since December.
- Weekly jobless claims in the US fell by 34,000 to 262,000 last week, the lowest reading since April 2000.
- Chinese consumer sentiment deteriorated in April, slipping back close to the level seen in November last year before the latest round of interest rate cuts began. Expect the Chinese government to continue to ease policy.
- Greece re-shuffled its negotiation team in an attempt to restart debt talks with its creditors, which had stalled in recent weeks. This is seen by many as a vote of ‘no confidence’ in Finance Minister Varoufakis’ ability to bring about a quick resolution. Greece also submitted to its creditors a new list of reforms it will pursue.
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