17 May 2013
· The Australian market continued its strong run this week, but the gains are limited to those stocks with high yields (banks and property), and with the falling Aussie dollar, those stocks with large US operations.
• Both the US and Japanese equity markets are also powering ahead, especially the Japanese markets, as the government’s attempts to stimulate the economy and spur inflation take effect.
• The Japanese market is now at its highest level in more than 5 years and the Japanese Yen continues to fall to a level not seen in more than four years. This is intended.
• Even European stocks have joined the party, rising to fresh 5 year highs, as economic conditions stabilise and the bonus of a rate cut from the European Central Bank.
• In stock specific news, AMP provided strong positive first quarter results with the integration of AXA going especially well. • Mirvac issued more stock to fund the acquisition of an office portfolio worth close to $600m and Westfield Group reported solid results.
• UGL unexpectedly slashed its profit guidance with the stock falling heavily; CBA posted a massive lift in cash earnings for the quarter; and BHP has pledged to cut capital and exploration spending by as much as $7.02bn annually within 2-3 years.
• Gold has plunged again this week back to levels not seen since early April and commodity prices have continued to fall.
• The Aussie dollar has fallen below parity and has remained there for the whole week, threatening to break below the 98c mark. The result of falling rates and weak commodity prices.
• US jobless claims declined to the lowest level since 2008 and US retail sales are 3.7% higher than this time last year.
• The Reserve Bank of Australia has indicated that rates may have to go lower again given its forecast for inflation has fallen to low 2’s (they aim to keep it within 2-3%) and wage growth has seriously stagnated.
• Whilst the mysterious Aussie unemployment numbers have remained largely positive, the big banks alone have cut more than 1600 jobs over the first half of 2013, and this is likely to continue.
• Business confidence took a hit in April as sentiment in the mining sector deteriorated to its weakest level in more than 4 years.
• A credit rating agency has upgraded its rating for Greece from CCC to B-minus….the market took no notice….maybe a little chuckle.
• Economic news locally was dominated by the Federal Budget – the proposals will not result in any material change to economic growth forecasts.
• Political news was dominated by the Federal Budget – the Labor Party’s 6th one and probably their best….though it may have a little too late given the opinion polls on the upcoming election.
• Unsurprisingly, but for the first time in a very, very long time, the Opposition has said they will largely vote the majority of the Government’s proposals….obviously with some changes.
• For a full review of the Budget, please click here to read our 2013 Federal Budget Update.
If you would like to discuss this week's wrap in further detail please do not hesitate to contact your Financial Adviser on 02 9324 8888 or alternatively send an email to firstname.lastname@example.org