13 Sep 2013
• The Australian share market bucked the trend of the last few choppy weeks and has risen strongly this week.
• The positive week was due to the election result which brought much needed confidence to investors and businesses, whilst military action against the Syrian government is off the agenda for now.
• The Australian market was also buoyed by positive data out of China which went against market expectations.
• The US market also had strong start to the week before levelling out. Other overseas markets followed suit. Notable was Europe, with European shares hitting 3.5 year highs.
• In company news, Leighton Holdings has advised that its subsidiary (Thiess) has been awarded a $1.8bn contract by coal seam gas producer QGC for works on their LNG project.
• The Aussie dollar rose to above US 93 cents during week before trading back down to 92. The rise was due to the improved outlook in China, the election result (which overseas markets took positively), and still some lingering concerns regarding Syria (the Aussie is seen as a safe haven).
• Gold and oil prices continued to rise following fears of an attack on Syria, with oil prices hitting a 28 month high.
• The Australian property market continues to rise with low rates stoking demand for home loans, which rose more than expected in July. The value of home loans is now at its highest level since September 2009.
• However, weakness in the jobs market shows how varied the performance is of different parts of the economy - the number of jobs advertised fell for the 6th month in a row to be only 5% above the lows reached during the financial crisis.
• The unemployment rate also ticked up to 5.8% - the highest level since June 2009.
• The European Central Bank (ECB) left rates on hold as expected and re-iterated their forward guidance for rates to remain at present levels or lower for longer. Things are improving, but at a very slow pace.
• Some positive data was released from the US with a non-manufacturing survey hitting a high not seen since 2005.
• This was in conjunction with the US unemployment rate falling from 7.4% to 7.3% - a 4.5 year low. However, the drop was due to people dropping out of the workforce altogether. Not good.
• Chinese exports were up over 7% as were imports – implication is that Chinese economy is still growing (imports) as is the rest of the world (exports). Chinese retail sales were also up strongly in August.
• Following the Coalitions sweeping win at the weekend election, there are now fears of a hung senate with the preferential voting system we have showing its ugly side. It will likely result in unheard of, minority parties, receiving a senate seat with fewer than 300 primary votes.
• As a result, an overhaul of the current voting system has been proposed.
• Business leaders have called for politicians to avoid a double-dissolution election (forcing another election) at all costs, fearing the hostile senate will threaten investor and business confidence.
• The Syrian crisis continued with the US threatening to act even without United Nations approval following the strong evidence they have regarding the use of a chemical agent. Russia and China thumped their chests as they vowed to support Syria, with Russia continuing to supply Syria with arms.
• However, the Syrians (and the Russians) came to their senses and are now cooperating, offering to hand over all chemical agents and cease their production. It remains to be seen who will be held to account for the atrocity that occurred.
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