25 Oct 2013
• The Australian market was up again this week, hitting a 5 year high, supported by continued positive updates from companies holding their annual general meetings, and with support from the US equity market.
• The US share market continues to create new all-time highs this time supported by strong quarterly profit numbers from companies reporting. The US market is now up over 23% for this year alone and is on track for its best yearly rally in a decade.
• European markets were positive, hitting 5 year highs, with reports that Spain has exited recession in addition to positive economic data more broadly.
• Asian markets were mixed following more serious concerns emerging regarding debt levels in China and poorer US job data than expected.
• In stock news, Santos reported record sales revenue of over $1bn for the third quarter of 2013 – the result was driven by the company’s highest oil production in 6 years.
• BHP Billiton announced that it ramped up iron ore production over the last 3 months to 49 million tonnes (an increase of 23%) – this is in response to a rising iron ore price and news that Chinese stockpiles have been running low since earlier in the year.
• David Jones CEO, Paul Zahra, unexpectedly announced his intention to resign citing feeling ‘burnt out’ since he took over the role 3 years ago. He also mentioned that he wouldn’t wish the last 3 years on anyone, an indication of just how tough the retail environment has been.
• Google Inc. (listed in the US) surged 16% with the share price rising above $1,000 per share for the first time.
• The Aussie dollar continued to trade higher this week, hitting a 5 month high of 97c, as the US dollar fell in conjunction with continued support from overseas investors looking to park their money here in Australia.
• It is looking increasingly likely that the Reserve Bank of Australia may have come to the end of its interest rate cutting cycle (putting further upward pressure on the Aussie dollar) given the strong support from the property and share markets, in addition to stronger economic data.
• However, given the low inflation reads of late and expectations of a rise in the unemployment rate, it also appears likely that the RBA will maintain the current low rate for a longer period.
• Positive economic data from China boosted global share markets this week with the Chinese economy growing at 7.8% over the last 12 months.
• However, some of the boost to share markets was given back following reports that bad debts within China had increased considerably.
• US employment data was positive, but below market expectations.
• It looks increasingly likely now that US central bank tapering (the slow winding back of stimulus measures) won’t begin until early 2014.
• The Federal Government announced they will seek parliamentary approval to increase its debt limit to $500b. The debt was expected to peak at $370bn prior to the election, but the government has been advised that it will exceed $400bn. The Coalition has a lot of heavy lifting to do from here on in…..
• The Abbott government has put business figures in charge of a Commission of Audit with sweeping authority to recommend the government do whatever it takes to return the budget to strong surplus within a decade. The action was well received by the market.
• Details emerged of the deal struck in US politics to end the government shut-down and raise the debt ceiling – President Obama signed a bill to fund the government through to January 15 and extend the debt ceiling through to February 7.
• Unless some sense prevails, it looks increasingly likely that history (the events of the last few weeks) will be repeated yet again. History is to be learnt from, not repeated.
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