19 Jul 2013
• The Australian share market has been relatively flat this week with no major surprises in economic data or on the political front.
• The US share market continues to rally ahead as economic data continues to improve and the US central bank clarifies that the stimulus program will only be wound back if certain economic conditions are met.
• Asian and European sharemarkets were also up for the week following the US central bank’s toning down of its stimulus wind-back rhetoric.
• The iron ore price has continued its rise, hovering just under $130 tonne, even with concerns regarding China’s growth rate.
• In stock news, Rio Tinto reiterated their full year guidance and their ramp up to 290 million tonnes of iron ore capacity remained on budget – if this is achieved, it will make them the largest iron ore exporter in the world.
• APA Group (Australia’s largest gas transmission and distribution network) made a merger proposal for gas distributor Envestra (of which APA already owns 33%). The price proposed looks a little thin and will probably have to be revised upwards – the merger would be a positive for both companies.
• BHP Billiton (BHP) and Insurance Australian Group (IAG) both reported strong numbers from their respective businesses with BHP ramping up production nearly across the board and IAG posting higher than expected insurance margins.
• Australian home loan values are up 18.5% on this time last year – the fastest growth since 2009 – suggesting further house price increases.
• June business conditions dropped to a 4 year low….this follows last week’s data showing unemployment lifting to a 4 year high….some testing times ahead for the Australian economy.
• Australian inflation data is due out later this month – it will most likely be a key catalyst for a 0.25% rate cut at the RBA meeting in August.
• There was a sharp drop in confidence among Australian medium sized businesses – the survey found 70% of respondents cited uncertainty over government policy as having the biggest impact. Overall business conditions also fell.
• We had the Chinese finance minister state that China’s economic growth would likely average 7% this year….markets reacted negatively to this given the government’s target of 7.5%.
• US consumer confidence levels fell slightly in July, but still remain near 6 year highs.
• Chinese investment in Australia soared 93% in the first half of 2013 on the same time last year. Chinese money following into the US almost quadrupled.
• The Federal Government has finally come to their senses shifting the carbon tax from a fixed carbon price to a floating price…..the shift will cost taxpayers $4bn….all this for tax which the Federal Government promised would not be introduce before the last federal election.
• At least the floating price will mean that Australia won’t be disadvantaged relative to the rest of the world who have enjoyed much lower carbon prices (to the tune of nearly $20 a tonne) since the tax was introduced.
• Given the budget hole the change has caused, the Government has announced that climate change programs will be slashed (this was a big ticket item going into the last election) and that fringe benefits tax concessions for salary sacrificed cars will be tightened…..not a bad move given the loopholes that exist, but a decision made without industry consultation….the Rudd of old is back!
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