2 Oct 2015
- Markets fell early in the week as global growth fears were stoked yet again with Chinese industrial profits down sharply in August from the previous year.
- Global markets then staged a recovery later in the week to finish flat to slightly higher on the back of somewhat positive comments from the US Fed.
- Commodity producers globally slumped to their lowest levels since 2009.
- In local stock news, ANZ Banking Group announced that CFO Shayne Elliott will become CEO and join the board on 1 January 2016, succeeding Mike Smith. Elliott has over 30 years international banking experience and joined ANZ in 2009.
- Metcash has provided updates on plans to revamp the company, with focus on store refurbishments, lower prices and brand restructuring.
- Origin Energy announced a sizable $2.5bn fully underwritten equity raising at $4 per share, a large 34% discount to their share price at the time of the announcement. Management also announced a cut to the dividend and is targeting up to $800m of non-core asset sales over the next couple of years. Action is aimed at strengthening the balance sheet in light of lower oil prices.
- The Chinese government may account for up to 20% of investment in the Australian bond market and a 1/3rd of all foreign buying, according to analysis from the IMF. The Australian dollar may come under further pressure as China begins to sell its stockpile of reserves.
- Australian population growth slowed to 1.35% in the first quarter of this year, putting further downward pressure on economic growth. The source of the decline was a further fall in the pace of net migration.
- Australian private credit growth edged up in August, with business credit growth continuing to gain momentum and housing credit growth continuing to show signs of levelling off.
- Australian building approvals were weaker than expected in August, recording their equal largest monthly decline in almost a year. Annual growth decelerated to 5.1%, well down on the 19% growth rate averaged in the first half of this year. Approvals have peaked, although levels of construction activity will remain high.
- US central bank chairwomen Yellen laid out the case for raising interest rates later this year. However, there isn’t much of the year left. She made some fairly obvious comments in relation to the strength of the US economy, which somewhat contradicted their decision not to raise. Markets liked her comments.
- Second quarter US economic growth was revised up to 3.9% from 3.7%, further showing the strength of the US economy. The revision was due to higher consumer spending and improved business investment.
- The central bank of China indicated that the Chinese currency may face short term devaluation pressures, thus putting further downward pressure on global inflation and potentially exacerbating capital outflows.
- The Turnbull government has reached in-principle agreement with the unions, employers, and welfare organisations to reduce a raft of concessional taxation arrangements that benefit the rich. This is the first direct union / Coalition talks since the 2013 election. Superannuation concessions for the well-off, CGT concessions on property held for longer than 12 months, and negative gearing on property, are all back on the agenda. Removal of Sunday penalty rates and an increase and broadening of the GST should also be added to that list.
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