3 Jul 2015
- Markets all around didn’t like the unexpected, and quite frankly, ludicrous events that unfolded in Greece and Europe. Markets don’t like uncertainty nor do they like surprises.
- The Australian market finished up, buoyed by some M&A activity and investors putting low yielding cash to work.
- Greek two year bond yields soared above 35% (a rise of 15%), whilst the Greek equity market closed along with their banks.
- The Chinese equity market continued to fall, down over 20% since the June high, after a surprise interest rate cut over the weekend failed to lift the market amid concerns over investors’ debt levels and declining sentiment given the uncertainty about Greece.
- In local stock news, Coles will refund more than $12m to suppliers to allow them to exit the supermarket’s retail program without penalty. The refund comes in addition to a $10m penalty.
- Crown Resorts got a boost this week following reports that a year-old transit visa restriction affecting Macau will be lifted. Starting 1 July, Chinese passport holders in transit can stay in Macau for up to seven days.
- Ports and rail operator Asciano received a conditional takeover proposal from Canada’s Brookfield Asset Management that would value the group at $8.8bn ($9.05 per share). The offer represents a 36% premium to the trading price at time of the announcement. Both companies are now in talks.
- Sydney home prices soared in June with prices up 16.2% from a year earlier. Melbourne was also up 10.2% over the same period. In contrast, the nation’s other major cities recorded annual growth of less than 5%. Sydney homes are now selling in just 26 days on average.
- New home sales in Australia pared back from record highs in May, as the number of detached house sales fell, despite the number of new apartments sold during the month hitting a fresh high.
- Australian credit growth rose in line with expectations. The components were very mixed, with housing credit up, personal credit down and business credit surprising on the up, but expected to fall away given slowing momentum.
- Building approvals have increased twice as fast as predicted in May, just short of a record high, as the number of apartments approved surged in the month. Apartment approvals were up 46% on the same time last year whilst house approvals were down 2.8%.
- Engineering and construction work yet to be done (excluding mining) has declined for the tenth consecutive quarter, while work done also fell 15.3%.
- Australian manufacturing data fell to its lowest reading since July 2013. Australia now has the lowest manufacturing reading among the US, UK, Euro, Japan and China. The Australian dollar needs to fall much further.
- US employers added 237,000 private sector jobs in June, the most since December. The number exceeded consensus estimates. The unemployment rate fell to 5.3%, the lowest since April 2008. However, data also showed that expansion has slowed, with downward revision of April and May’s figures, flat wages growth and a low participation rate.
- Manufacturing data showed Eurozone factory activity had hit a 14 month high in June. A falling currency helps with competitiveness.
- The Greek debacle continued over the weekend and into this week, with a missed payment to the IMF and the closure of banks. Greek PM Tsipras unexpectedly announced a referendum whereby citizens will be asked to vote yes or no for the proposals put forward by the EU authorities. The proposals they’re voting on are largely void as they have been revoked by the EU. So the vote has now become a vote for Euro inclusion or exclusion. The EU authorities have vowed not to negotiate until after the referendum. A yes vote will see Tsipras toppled, whilst a no vote will likely see him retain power. As to how negotiations play out after the vote is anyone’s guess.
- Former Treasury secretary Martin Parkinson has cast doubt over the government's budget forecasts, warning that the nation's economic outlook is more precarious than Canberra's political classes recognise. He stated there was much more risk around Australia's future prosperity than has been recognised by either side of politics. We tend to agree.
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