23 Aug 2013
• The Australian share market has experienced a choppy week and appears to be on path for a flat week.
• The main news affecting both the local and global share markets has been the anticipation as to when the US central bank (the Fed) will begin winding stimulus measures back in. • Asian markets are off again this week given concerns on the potential outflow of foreign investment in these markets once the US Fed begins cutting stimulus.
• Asian markets were also not helped by the sharp fall in the Indian rupee (currency) which resulted in an equally sharp fall in the Indian stock market.
• In stock news, company reporting season continued this week with ANZ, BHP, and NAB reporting in line with expectations, Challenger, Ansell, Woodside, and Breville (can’t say no to good breville…) above, with QBE and Coca-Cola Amatil missing expectations.
• BHP Billiton raised the company’s bet on Chinese and global food demand announcing a surprise $US 2.6bn investment in potash – the key ingredient in fertiliser. This comes as they are heavily cutting investment and costs in Australia.
• The Aussie dollar continues to trade above 90c against the US dollar as Chinese demand for our resources looks to be picking up again.
• World oil prices rose and continue to remain high following the unrest in Egypt and Syria.
• The Reserve Bank of Australia released the minutes of their last meeting….the high Aussie dollar is clearly on their minds and may result in a November rate cute if it doesn’t begin to fall.
• US housing starts rose by a smaller than expected figure in July, but are still up 20.9% over this time last year.
• Other US economic data continues to be mixed and may put at risk the anticipated September start date of US Fed’s stimulus tapering.
• Some surprising economic date out of the UK with retail sales jumping in July and pushing annual sales growth to a 2.5 year high.
• Average new home prices in China’s 70 major cities rose 7.5% over the year to July dampening some of the western world’s concerns regarding a Chinese housing bubble.
• Data showed Japanese exports rose strongly in July to be at its fastest pace in almost 3 years….. Japanese central bank action to force the Yen lower seems to be working.
• The political one-liners have begun with Tony Abbott shooting himself in the foot before recovering with one for the history books.
• He proposed earlier in the week that there would be a second mining boom if there’s a change of government……now unless he’s planning on forcing China to buy more of our iron ore or forcing unions out of Australia, his claims are laughable at best.
• Now for the recovery – during a debate with PM Kevin Rudd that apparently was very well choreographed from both sides, Abbott decided enough was enough and asked the crowd “does this guy ever shut up?”
• The NBN has suffered another set-back (hardly surprising) with the discovery of a $5 billion blowout in its construction costs, partly caused by contractors demanding more money (bid low, get the contract, and ask for more money after). Good to see the Government feeling real-world problems, but it shouldn’t be a taxpayer’s expense.
• The Federal Government has rejected claims from Chevron that Australia’s high cost economy is threatening the nation’s biggest energy project even as the Maritime Union of Australia demands a 26% pay rise and more than 100 other benefits for its members….some of these include Qantas Club memberships and iTunes store credits…..Qantas & Apple would be pleased.