20 Nov 2015
- Stocks globally rose as the US central bank moved ever closer to a December rate rise, with most board members suggesting current conditions were solid enough to raise rates.
- Markets were buoyed by the ongoing strengthening of the US economy, in a slow week for economic news.
- Somewhat surprisingly, there was little downward movement in equity markets following the tragic Paris attacks. It appears markets have become accustomed to some level of conflict in the world.
- In another US mega-deal, Marriott announced it wants to acquire Starwood Hotels and create the world’s largest hotel company. The $12.2bn cash and stock deal (no debt) will create a company with 5,500 hotels and 1.1 million rooms, and is expected to generate $200m in annual cost savings.
- In local stock news, ANZ Bank has confirmed that it expects to fully frank dividends for the foreseeable future, after media speculation suggested that the bank may be running low in franking credits.
- Tatts Group and Tabcorp have ended talks on a potential $9.4bn merger, saying no deal could be reached between the two companies. Confidential discussions had taken place, but the respective boards couldn’t reach agreement on a nil-premium exchange.
- Asciano will allow a Qube-led consortium to study its accounts, after last week receiving a rival bid from the group in an attempt to outmanoeuvre the $8.9bn Brookfield offer. The Asciano board maintains that the Brookfield offer remains best.
- QBE shares fell after the company said it is experiencing a tougher pricing environment with competition remaining competitive in all markets. The company maintained its guidance ranges for the full financial year.
- Oil prices fell on a stronger US dollar and increasing US inventories.
- Gold prices tumbled to their lowest level in more than five years as the US dollar strengthened and as the odds for a December US rate rise firmed.
- Australian wage growth has held at the equal slowest annual rate since the government started issuing the data nearly 20 years ago. Following recent falls in inflation, annualised wages growth remains above the rate of inflation.
- US retail sales were lack-lustre in October. However, consumer sentiment rose strongly in November, which should result in a pick-up in retail sales leading into the holiday period.
- Chinese industrial production growth eased back in October. Power, electricity, steel and cement were particularly weak. Fixed asset investment (a proxy for iron ore demand) declined only marginally. Retail sales grew strongly.
- France’s economy expanded in the second quarter, but German growth slowed. Overall, the Eurozone grew at a lack-lustre pace, below forecasts.
- The International Monetary Fund (IMF) published a paper saying that the Yuan, China’s currency, meets the requirements of a freely usable currency. This signals the IMF’s likely intention to add the Yuan to its basket of reserve currencies (US dollar, Pound, Yen, Euro).
- Latest polls show that the majority of voters support increasing the GST if it includes compensation for lower and middle-income earners. Good to see politics working the way it should, i.e. put a potential policy change out in the public domain with all available information and let the public make an informed decision, before pushing it through parliament.
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