19 Apr 2013
• Markets struggled again this week following weak economic data from the US and China, and some external events (Boston bombings and China bird flu) which have negatively impacted markets.
• Earnings of US companies are showing signs of slowing ahead of reporting season.
• The Australian resources has been especially hit hard following reports Chinese growth had come in well below expectations (resulting in a sharp drop in commodity prices). Resources stocks around the world fell sharply.
• In contrast, both BHP and RIO reaffirmed their full year guidance on output.
• Wesfarmers and Bank of Queensland both reported positive updates at quarterly and half yearly briefings respectively.
• The gold price has continued its dramatic decline losing nearly 8% in one day, getting close to breaking single-day loss record of more than $100 per ounce and falling to a 2 year low. Other precious metals also plunged.
• The fall in the gold price has not been pinned to one particular issue – US winding back policy easing; European central banks seeling gold reserves to fund ailing economies; investors seeking better returns elsewhere.
• Oil fell below $100 a barrel for the first time in 9 months as concerns mounted regarding demand.
• Chinese economic growth unexpectedly slowed in the 1st quarter of 2013 reversing the recovering trend seen since the 3rd quarter of 2012.
• A survey of business conditions in Australia fell back further in March to the lowest level since May 2009….this follows last week’s rise in unemployment.
• Jobless claims in the US fell again after stagnating more recently. This was in conjunction with falling retail sales and consumer confidence, and weak manufacturing and housing data.
• On the domestic front, home loan values lifted in February to more than a 3 year high – this shows investors are buying established properties (further upward pressure on house prices)…. construction loans (new housing) remain at very low levels.
• The Reserve Bank of Australia is further indicated a potential cut in the cash rate….the upcoming inflation numbers will be key.
• The Eurozone posted a trade surplus of EUR 12bn in February….Germany alone post a surplus of EUR 13bn….further showing who’s doing the heavy lifting in the Eurozone.
• The federal opposition announced their alternative NBN plan to mixed reviews….whilst their plan will be cheaper and completed earlier, it will not result in the lightning speeds being promised under Labor’s NBN.
• Federal Labor’s primary vote has now fallen below 30% for the first time in almost a year, with just 5 months until the election.
• The business community, led by BHP, has attacked the Labor government’s second round of changes to industrial relations laws…..this follows Woodside’s cancellation of its $40bn gas project due to rising costs of processing the gas on the Australian mainland.
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