24 Mar 2016
- Markets were choppy this week as they continued to digest the US central bank’s dovish comments and as terrorist attacks rocked the Belgian capital.
- The takeover battle for Starwood Hotels (Sheraton, Four Points, Le Meridien, Westin, and more) heated up with Marriot re-trumping Chinese insurance conglomerate Anbang with a US$14bn bid. If Marriot succeeds, it would create the world’s biggest hotel company. Marriot are due a US$450m break free if the deal doesn’t proceed.
- In local stock news, ANZ announced that it expects the 1st half 2016 credit impairment charge to be at least $100m higher than expected due to resource sector exposures. Market didn’t like the news. The figure itself is largely immaterial (even though the press will have you believe otherwise); it’s more about the quick change since reporting on impairments last month.
- Sydney Airport announced that total passengers grew 10%, with international and domestic markets growing 12.7% and 8.5% respectively. Foreign inbound traffic grew 14.1%, supported by China, USA, Korea, and Japan. Falling Australian dollar is helping boost the tourism sector.
- A division of CIMIC Group has been chosen as the preferred contractor for the second stage of the Gold Coast light rail project. Revenue has not been confirmed, but the Queensland government has set aside $420m in funding.
- In Australian M&A news, Telstra is considering a $4.5bn share market float or sale of its 50% stake in Foxtel. Also in the media sector, some equity reshuffling was on the agenda, with Macquarie Group selling a 15.7% stake in Southern Cross Media and Nine Entertainment picking up a subsequent 10% stake. Possibly getting ready for a change in media laws.
- The Australian dollar rose early in the week against the US dollar as the market digested the US central bank’s revised lower rate rise trajectory, which saw further selling of the US dollar globally.
- However, sharp commodity price falls saw the Australian dollar lose all early gains.
- The weighted average of house prices across Australia’s capital cities rose 0.2% in the 4th quarter of 2015. House prices were up over 8% on the same period in the previous year. Sydney house prices fell 1.6% in the quarter.
- Existing US home sales fell 7.1% in February, coming in well short of expectations.
- PM Turnbull announced that federal parliament would be recalled on April 18 to sit for three weeks in order to pass key legislation with the federal budget brought forward one week to May 3. If the legislation is not passed, the PM has indicated he will call a double-dissolution election, most likely in July.
- The IMF has called on China to be more transparent on their currency holdings as speculation continues regarding their use of derivatives to manipulate the currency market. The use of derivatives allows them to slow their use of foreign exchange reserves in order to maintain the currency’s peg to a basket of currencies.
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