16 Aug 2013
• The Australian share market rose strongly early in the week following some positive results from company reporting season.
• The market then flattened out in the middle of the weak following some poor results from US company reporting season leading to the US market taking a much needed breather.
• In stock news, JB Hi-Fi, CBA, AMP all beat expectations, whilst Domino’s Pizza, REA Group (realestate.com.au), Worley Parsons, Computershare, Leighton Holdings, and CSL all met expectations. Newcrest and Wesfarmers missed.
• European share markets were boosted by positive Chinese data and the 1st quarter of Eurozone economic growth since September 2011.
• The Australian dollar has remained elevated since the RBA’s rate cut – upward pressure is being exerted by the higher iron ore price and the pick-up in economic data in China.
• The iron ore price is now back over US$140 a tonne providing a boost to the resources sector.
• World oil prices rose to 4 month highs as tensions in Egypt escalated.
• The Reserve Bank of Australia has downgraded its guidance for Australian’s economic growth to 2.25% - this is concerning considering our growth rates over the last 10-20 years.
• Australian wages are rising at their equal slowest pace in 3.5 years…..putting less pressure on the inflation rate (i.e. giving the RBA more room for rate cuts). Obviously at the detriment of the Australian worker, but the alternative is likely to be further job losses.
• Chinese inflation data came out lower than expected and gives the government room to introduce stimulus into the economy where required.
• Stronger economic figures out of China helped boost the iron ore price and also the Australian share market this week – industrial production and consumer spending were up strongly.
• We had some poorer data out of the US for a change, which isn’t surprising given data has been somewhat choppy over the last week or so.
• Data released in Germany and France showed better than expected growth in both countries’ economies. This is in contrast to the worsening economies of their southern partners (Greece, Spain & Portugal).
• The strong positive data from Germany and France was enough to end Eurozone’s 6 consecutive quarters of contraction.
• The Liberal coalition must find at least $16bn in new spending cuts or back tax increases to stop the budget going further into deficit….very similar to the position the Government finds itself in, but somewhat worse given the opposition’s pledge to cut the company tax rate.
• Something the Australian public must come to grips with….you can’t want a budget surplus without expecting rising taxes and spending cuts….decreasing debt is never easy.
• The Liberal coalition has announced that they will preference Labor above the Greens in every lower house seat at the election. The ploy is aimed at minimising the chance of another minority government….finally, some sense has prevailed. Hopefully the Labor party does the same.
• Opposition leader Abbott finally surfaced in the news (surprising given his strategy to remain out of the headlines leading into the election) with a gaffe whilst talking up a female colleague with his daughter by his side…..oops!
• The Australian Taxation Office is on somewhat of a warpath (usually happens with the Government indicates they’re in desperate need of additional revenue) hitting big businesses before they lodge their tax returns and potentially going after SMSF asset sales.