13 Nov 2015
- Australian stocks fell as resource and bank stocks pushed the market lower.
- Investors liked the spike in consumer confidence, but didn’t like the bumper employment numbers, which could see the end of the RBA’s rate cutting cycle.
- Global stock markets also fell as the US central bank moved closer to raising interest rates in December.
- The world’s largest brewers have finalised the $172bn deal for Ab InBev to take over SABMiller, which will be the third biggest takeover in global corporate history.
- In local stock news, the rail and ports owner/operator Asciano now has two takeover offers on the table for their shares. Brookfield Infrastructure Partners has acquired close to 20% of the company and has announced a binding offer. Qube, in consortium with some large Canadian investors, has also acquired close to 20% and has announced a conditional and non-binding offer. Both offers are around the $9.20 mark at this stage.
- BHP Billiton share price fell following confirmation and further news of the mine disaster in Brasil, where a dam wall gave way. The iron ore mine is owned and operated by BHP and their Brazilian counterpart, Vale. There will be clean-up costs and supply will be impacted.
- Santos unveiled a new CEO and announced capital initiatives totalling $3.5bn to shore up its balance sheet in light of persistently low oil prices. The new CEO comes highly regarded. The initiatives include a $2.5bn entitlement offer, a $500m private placement to an Asian investor and $520m from the sale of a minority stake in a gas field.
- CIMIC Group (previously Leighton Holdings) will acquire the minority stake in Queensland property developer Devine which it does not already own. The move comes after Devine recently warned that it would not meet its earnings guidance for 2015 and after the CEO’s resignation.
- Australia’s unemployment rate dropped to 5.9% in October, beating expectations by a wide margin. The September reading was 6.2%.
- Australian job advertisement have risen for the third consecutive month. Job ads in the 12 months to October are up a strong 12%.
- The RBA lowered its growth forecast for the economy from 2.50% to 2.25% for this calendar year. The RBA also lowered its inflation projections to 1.75%, well below their target of 2-3%.
- A flood of Asian tourists is expected to help the Australian economy in light of the lower Australian dollar. Travellers to Australia are at record highs, and for the first time ever, tourists from China/Hong Kong overtook New Zealand in September.
- Australia’s trade deficit narrowed in September on the back of high iron ore exports to China and lower fuel imports.
- Australian retail sales fell slightly below expectations, highlighting little evidence of a recovery in underlying momentum. Monthly turnover was weakest in department stores, with household good retailing also quite weak.
- US employment data surprised everyone, with 271,000 new jobs in October. This followed disappointing job gains in August and September. The unemployment rate fell to a seven year low of 5% and average hourly earnings beat expectations.
- In light of the bumper jobs data, the probability of a December US rate rise has now risen to over 70%. Some commentators have gone as far as to say that a December rate rise is now guaranteed.
- Chinese consumer inflation data slowed again in October due to lower food prices. Policy makers may need to boost stimulus to ease deflationary pressures.
- The Federal Government is looking closely at proposals to extend the GST to currently exempt financial services. The move could help pay for a cut to the company tax rate. Analysis shows that as much as $27bn could be raised from a 15% GST if it applied to banks and financial services.
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