14 Jun 2013
• The Australian share market steadied this week with the market finishing relatively flat after 4 weeks of losses.
• Positive economic data domestically and globally has assisted the Aussie share market.
• In stock specific news, Newcrest released an update outlining its intention to massively cut costs across the entire group and write down the value for some of their key assets. The market punished the company and there’s now an investigation as to whether the company breached disclosure rules.
• Santos announced that it had discovered natural gas through an exploration well in Australia’s Browse Bain, highlighting the area’s potential going forward.
• Echo Entertainment (think Star City) has declared that their board stands behind their CEO after staff reports that he drank too much and fell asleep in a bar….shareholders shouldn’t be too concerned as long as he was paying for the drinks and after all he wasn’t in a Crown facility….
• Rio Tinto moved closer to selling about $3bn in coal assets after receiving interest from 3 potential bidders. This is part of RIO’s plans to sell non-core assets.
• The Aussie dollar has maintained its tight trading range between 94 and 95 cents against the US dollar.
• Asian markets were mixed over the week trading very closely off released economic data – Japan was key holding off on releasing any fresh stimulus measures for the time being. Markets globally were concerned by this.
• European shares fell to six week lows earlier in the week after concerns regarding issues abroad….you would’ve thought issues closer to home would’ve been more concerning.
• Locally, capital expenditure in mining dropped to the lowest level in 11 years whilst business conditions more broadly inched higher. Consumer confidence also rose.
• The unemployment rate remained unchanged at 5.5% surprising most in the market.
• Goldman Sachs have downgraded their economic forecasts for Australia predicting a one in five chance (20%) of Australia dipping into a recession….given we’re a betting nation, the report was largely ignored by the market.
• The US labour market recovery may be in the process of softening as recent figures show that job growth has slowed.
• Ratings agency Standard and Poor’s has revised their outlook for the US credit rating from negative to stable.
• The European Central Bank (ECB) made no change to the cash rate of 0.50% whilst confirming that this low rate will be in place for the foreseeable future.
• Members of the US Fed (the US central bank) are obviously confused….markets have been spooked over the last couple of weeks by talks of reigning the stimulus back in….now we have a key member of the board citing poor inflation readings as concerning and that the stimulus may be in place for longer….a little like flipping a coin!
• Bank of Queensland boss Stuart Grimshaw was asked his thoughts on the upcoming federal election at a luncheon – “If I went to the shareholders and said, ‘We’re going to make a $1 billion surplus, oh sorry it’s a $6 bn deficit, I’ve got to go for an equity raising’, you sort of wouldn’t be around….numbers are fictional but the point is succinct.
• The Business Council of Australia is pleading with the independents and the Senate to consider the national interest and reject the last-minute frenzy of “anti-business” legislation being rushed through in the final days of Parliament. The laws would be very difficult to unwind in future.
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