22 Feb 2013
· Those that watched the news last night or read the headlines this morning will know there was a market sell off yesterday – down over 2%.
• The market started the week off at 5,035, and is currently sitting at 5,041, so if you hadn’t seen the news last night, you’d be asking what sell off!
• Reporting this week were: Rio Tinto (slight negative), ANZ (neutral), Amcor (positive), Coca-Cola Amatil (positive), Sonic Healthcare (negative), BHP (negative), Woodside (positive), Qantas (positive), Origin Energy (negative), IAG (positive), Brambles (positive).
• Earlier in the week, National Australian Bank (NAB) and Westpac (WBC) closed at their 3 and 5 year highs respectively.
• The CEO of BHP announced he is stepping down as CEO after more than 5 years – he will be succeeded by Andrew Mackenzie, head of BHP’s non-iron ore metals division.
• The US stock market has advanced for 7 straight weeks, the longest streak since January 2011. This week may be the end of the run.
• Gold has fallen considerably over the last week down approximately $60 US dollars an ounce, and down more than $100 US dollars per ounce since the beginning of the year – the result of positive sentiment (i.e. gold is purchased when sentiment is negative) and some large US investors significantly reducing their exposure to gold.
• The Aussie dollar has continued its slow decline, now at 1.02 against the US dollar.
• The Reserve Bank of Australia (RBA) noted in the minutes of its February meeting that global economic conditions had improved since the start of 2013.
• They also said that with inflation expected to remain within its target range, it had room to cut the cash rate further if needed.
• Wages growth in the last quarter of 2012 moderated, lowering the annual pace of growth to the slowest pace in 2.5 years. This is a positive for inflation.
• Consumer sentiment surged in February to levels not seen since September 2011. The result was driven by increased optimism about the economy and personal finances.
• The positive momentum of US housing continues with some more positive data released.
• It is now the turn of the central bankers of the world to spook markets by announcing concerns regarding the reigning in of the stimulation (multiple kickers) they have collectively provided since the GFC. Funnily enough, the politicians of the world have taken a back seat and are letting the central bankers have the stage….fairly logical given instinct is to take cover when someone else is throwing the grenades!
• The result has been that markets have slowed considerably over the last couple of days and risks are back on the agenda….the risks actually never went away. Central bankers have become concerned with the rapid effects their actions are having on markets and have sought to reign them back in a little.
• We will have a new leader in Italy next week – the markets are still concerned over the outcome here.
• Closer to home, the NSW state government has banned coal seam gas exploration and production around residential areas in NSW.
• The federal Greens confirmed that its agreement with the Labor party is officially over – the leaders of both parties have now given their members permission to attack each other.
• The press (both print and internet) continues to print catchy stories with no basis – this time we’re in the midst of so-called “currency wars”….yes, that’s plural. If the Japanese government and central bank’s attempt to do what’s best for its citizens (i.e. to lift the country out of its 2 lost decades of economic growth) rather than what’s best for the world is perceived as a currency war, then we’ve been in the midst of currency wars since the introduction of money.
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