24 Jan 2014
Treasurer Joe Hockey has warned that the manufacturing workers’ union is at war with Toyota and is threatening the car maker’s future in Australia. The company wants to slash labour costs by $17m by cutting pay and conditions, but is facing strong resistance from the union. He has reiterated the Government’s stance that companies must be able to stand on their own two feet before support can be extended.
PM Abbott delivered his keynote address to world and business leaders in Davos, Switzerland, at the World Economic Forum. Reports are that his address was very well received. He urged nations to abolish protectionism and open up to more free trade. Another key focus was encouraging business to invest, and to create jobs and infrastructure. He is the first Australian PM to attend the key event since Howard in 2005.
The Australian share market fell this week due to concerns regarding China, in addition to the higher than expected inflation data.
US company reporting season is underway with mixed results so far. The results have driven much of the market movements this week in the US and globally.
European markets took a breather following their strong run since the beginning of the year.
The Chinese share market fell to its lowest level in nearly 6 months. Asian markets were a mixed bag overall.
In stock news, Royal Dutch Shell (foreign listed) has been divesting its Australian assets (considered either non-core or underperforming) selling out of an LNG project in WA whilst also attempting to offload the refining and marketing business (service stations).
BHP Billiton reported falls in quarterly production at its petroleum and Pilbara iron ore divisions. Despite the falls, BHP produced record volumes of coal and iron ore in the 2nd half of 2013.
The iron ore price has continued to fall, to its lowest level in 6 months, not helped by poor data out of China, or concerns regarding China’s slowing growth rate and their potential debt bubble.
The Aussie dollar traded between 87 and 88 US cents during the week, pushed lower by poor Chinese data, before being pulled higher by the higher than expected local inflation reading.
Australia’s rising jobless rate is chipping away at consumer confidence, with the lowest consumer confidence reading since July 2013, despite the usual January holiday effect.
Australian inflation rose more strongly than expected this week, with inflation now close to the RBA’s upper band (3%). The rise could halt the RBA’s willingness to consider lowering the cash rate further, even in light of a weakening labour market and still too high Aussie dollar.
Lacklustre business confidence, rising unemployment, and corporate downsizing have produced the biggest glut of office vacancies since 1997, with nearly 12% of the nation’s office towers empty (Brisbane the worst).
US economic data released was mixed. Consumer sentiment fell, industrial production rose strongly with manufacturing output also up. But housing starts fell by nearly 10% in December, no doubt the severe cold weather played a part.
Full year housing starts (new homes) for 2013 in the US were up 18.3% from 2012 levels – impressive…..something we could learn from given the housing pick-up here has all been existing stock and investor led.
The IMF (International Monetary Fund) has revised its forecast for 2014 global growth from 3.6% to 3.7%, and now expects global growth of 3.9% in 2015….all positives.
China’s central bank offered funds to big lenders in a bid to boost liquidity in the system….a positive that they moved quickly, but also concerning that they had to move.