1 Apr 2016
- Equity markets finished higher this week as investors were buoyed by dovish rhetoric from the US central bank regarding their expected interest rate trajectory.
- The Australian market finished lower, weighed down by falls in the financials (banks) and consumer staples sectors (grocery retailers).
- Chinese stocks finished higher on some better than expected earnings results along with less concerns regarding capital outflows after the currency rose.
- In local stock news, Westpac flagged higher debt provisions due to bad consumer loans in WA and QLD, which have been hit by the resources industry downturn. The additional provisioning is small relative to Westpac’s loan book.
- Carsales.com announced it acquired a controlling shareholding in the number one automotive classifieds website in Chile.
- Medibank Private has announced that Craig Drummond has been appointed the company’s managing director and CEO to succeed current long serving CEO George Savvides, who is retiring. Drummond is well regarded having previously held very senior roles at NAB, Bank of America Merrill Lynch and Goldman Sachs.
- Air New Zealand announced it was exploring options for its 25.8% stake in Virgin, including a possible sale of part or all of it. Not unusual, except for the fact that just over a week ago they contributed $131m of a $425m loan facility to Virgin. The share price fell sharply.
- The Australian dollar broke through the 77c market against the US dollar, the result of the US dollar falling on news the US central bank was likely to raise rates at a slower pace than previously flagged.
- The number of Australian job vacancies continues to rise, signalling underlying strength in the economy as employers seek out more workers.
- A key Australian housing report showed that new home sales were much lower in February, recording a drop of 5.3%. The slowdown centred on apartments.
- The US central bank chairwoman Janet Yellen announced that the central bank needed to proceed cautiously on raising rates given fears about the domestic and global economies (more so the latter).
- US consumer spending rose just 0.1% in February and January’s spending was revised lower. In contrast, consumer confidence rose strongly in March, coming in above expectations.
- US inflation was lower versus the reading in January as energy prices continued to weigh. Excluding volatile food and energy prices, prices were up 1.7% over the year.
- A key US employment report showed that the private sector added 200,000 jobs in March. February’s job gains were revised slightly lower but remained a strong result.
- The European central bank highlighted that lending was not growing enough to support investment or productivity, which was one of the primary factors that motivated the last round of stimulus measures.
- US Presidential candidate Donald Trump has suggested that the US military should be withdrawn from the shores of Japan and South Korea, with nuclear weapons replacing them. There are currently 54,000 US troops in Japan and 28,500 in South Korea. He doesn’t believe Japan and South Korea are paying their way for this level of protection and could protect themselves with less assistance.
- The Chinese government announced it will impose new tariffs on cross border e-commerce. If enacted, Chinese buyers on all imported goods purchased online must pay an 11.9% value-add tax and consumption tax if applicable.
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