31 Jul 2015
- The Australian market pushed higher this week, buoyed by rising US stocks and the resources sector, which pushed higher on rising iron ore prices and opportunistic buying.
- The Chinese stock market had its biggest one day fall since February 2007, as investors appeared to lose confidence in the government’s ability to stabilise the market. Full intervention is at odds with the government’s plans to liberalise the economy and its financial markets.
- Asian and European markets followed suit, before recovering in light of US market moves.
- In local stock news, CIMIC Group (the old Leighton Holdings) reported a strong interim result following the completion of the major business restructuring and transformation program undertaken by its new management team, which saw gearing reduced, cost reductions, and the company re-positioned to deliver more sustainable profits and cashflows.
- South32 shares rose after media reports suggested the company had appointed defence advisors, implying they may be expecting a takeover approach. The stock has fallen close to 20% since being spun out of BHP on the back of falling commodity prices.
- The banks have increased their interest rates on new and existing investor property loans in response to the regulator’s efforts to slow investor mortgage lending growth. Some figures show this alone will add circa $240m to CBA’s net profit after tax.
- CSL received a favourable ruling from the US FDA for its drug used in the treatment of haemophilia A, which is a congenital bleeding disorder which affects 1 in 6,000 male births.
- The number of Australian building approvals has dived in June, as the volatile apartments figure shrank sharply in the month by 8%. Market expectations were for a 1% decline. Seasonal factors are usually at work this time of the year, but the trend may continue as housing finance approvals have fallen and with the recent increase in investor lending restraints.
- US second quarter economic growth came in at 2.3%, below the 2.7% expected by economists. The US government also revised up first quarter growth from negative 0.2% to positive 0.6%.
- The US central bank said the labour market and housing have improved, moving closer to ending an unprecedented period of near-zero interest rates without providing a clear signal on the timing for lift-off.
- US consumer confidence fell to a 10 month low in July, possibly the result of concerns regarding China and the Greek debt crisis.
- New US home sales were down 6.8% in June from the previous month, and came in well below expectations. However, sales were up 18% from June 2014 levels.
- Key global manufacturing data points showed manufacturing contracting in China, with Eurozone weaker than expected, and the US largely in line with expectations. China’s reading was the lowest in 15 months.
- Treasurer Joe Hockey agreed to examine Labor’s so-called Buffett Rule, which would lift the government’s tax take by $2.5bn. The rule was proposed by Warren Buffett in the US and aims to set a minimum tax rate for anybody earning more than $300,000, in response to a lot of high income earners paying little to no tax with the use of tax deductions and other structures.
- Greece’s creditors are preparing for a fresh round of talks on the country’s third bailout package, amidst calls for debt relief from both Greek PM Tsipras and the IMF’s Christine Lagarde. Lagarde also called for sensible fiscal policies and structural reforms that would support the Greek economy. Rumours are also circulating that the IMF is unlikely to support the 86bn euro bailout.
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