1 Mar 2013
• The Australian share market closed on Thursday at its highest level since 2008 off the back of positive results from company reporting season. The market looks likely to finish a little higher this week.
• The market is still in the midst of reporting season with the following notables reporting: Santos (positive); Caltex (positive); QBE (negative); Ramsay Healthcare (positive); Flight Centre (positive); AGL Energy (positive); UGL (negative); Sydney Airport (positive); Woolworths (neutral); Harvey Norman (positive); Perpetual (positive).
• Global markets were volatile this week with the non-result of the Italian election affecting every equity and bond market around the world (mainly negatively)……surprisingly with the exception of the Italian markets.
• Markets are concerned regarding the flow-on effects to the rest of Europe given Italy’s prominence and importance in the keeping the Euro zone together.
• US markets were choppy during week, but largely up, following the Federal Reserve chairman’s testimony to the senate banking committee. Gladly, he reversed some of last week’s market killing talk (by some of his governors mind you) that the Fed will be stimulating growth for some time to come.
• The Reserve Bank of Australia (RBA) spoke at length this week – he’s fairly comfortable with where the economy’s at, indicated that the RBA is likely to reduce rates rather than increase in 2013, and mentioned the Australian dollar being overvalued.
• Unsurprisingly, the UK lost its AAA credit rating this week…though it is for the first time since 1978….rather significant when you look at it like that I guess.
• US consumer confidence rose to a 3 month high in February….the rise is much needed. And new home sales rose by nearly 16% in January (well above forecasts), which shows the US housing recovery is on its way.
• Private sector credit in Australia was slightly up in January, but still tracking well below long run average levels. Housing credit was the strongest category while business credit was flat.
• Australian households continue to show borrowing restraint, there is low business appetite for debt, and deposit growth remains stronger than credit growth. This is in stark contrast to household and business balance sheets being in relatively good shape and the household savings ratio still very high – both of these should normally lead to credit growth, but may not.
• The result of the Italian election finally arrived this week after 2 days of voting…..yes, unlike the rest of the world, the Italians need an extra day to vote.
• The result actually wasn’t a result with no party receiving a majority in the all-powerful senate. It is unlikely a coalition will be formed given the 3 largest parties by votes have completely different agendas. Likely that a new election will be held….news out that it may take another month to organise it.
• Julia Gillard has snubbed Labor’s most popular member (based on recent polls), Kevin Rudd, by leaving him off the invitation list to an event in his own electorate….apparently he was not even notified about her visit to his electorate. The leadership saga continues.
• Both leaders will tour western Sydney over the next couple of weeks with their tours set to overlap…..let’s hope western Sydney is ready for what is very early campaigning given how far away the election is.
• Further to the above point, the media has taken to Ms Gillard’s decision to stay in Rooty Hill whilst campaigning in western Sydney….it pains me to even mention it again, but surely the media have more important matters to report on.
• In contrast, Mr Abbott will be commuting daily into western Sydney……something about wanting to experience Sydney traffic…..he may need to extend his tour to account for hours (days) lost.
Thanks for reading and have a great weekend,
Chief Investment Officer, PSK Financial Services
Dont forget if you would like to discuss this weeks wrap in further details please feel free to contact your financial adviser on 02 9324 8888 or firstname.lastname@example.org