3 May 2013
• The Australian share market traded fairly flat this week - within the 5100 range. The market was kept to this range on the back of strong gains by banks, but tempered by resource falls.
• ANZ reported Tuesday with a bumper result and increased dividend. They reported a 10 per cent rise in first-half cash earnings to $3.18 billion and announced a forecast-busting dividend. Shareholders were rewarded with a pay rise - the interim dividend up by 11 per cent to 73 cents a share.
• RIO announced plans to almost halve the size of its London head office. According to an internal memo seen by Reuters, more than 200 jobs will be cut as it tries to slash more than $US5 billion ($4.8 billion) in costs by the end of next year. RIO has been reviewing high-cost office locations including London since last year, as it battles falling commodity prices.
• TLS touched $5 this week… its shares are now up over 70% in the last 2 years despite its revenue and earnings not having increased in the last 3 years – that’s a concern.
• Westpac today continued the run of big bank profits - reporting a 10 per cent jump in first-half cash earnings to a record $3.525 billion. The bank declared a fully-franked 86c dividend, with a further fully-franked special dividend of 10c per share.
• Australia's biggest investment bank, Macquarie Bank surprised markets in its annual profit announcement today – up 17% in 2013 ($730m to $851m) and pointed to an even better result in the year ahead. This sent the share soaring – up 10% on the day.
• The bank results, while impressive, showed growth in earnings on the back of improved interest rate margins, (i.e.) passing on lower rate cuts than the cost of funding. Given this won’t last forever, coupled with their own outlook for subdued lending growth and share prices at historic highs, caution is needed here.
• In Australia, private sector credit (lending) rose by 0.2 per cent in March after a 0.2 per cent rise in February. Annual credit growth fell from 3.4 per cent to 3.2 per cent – the slowest pace in 19 months.
• Housing credit grew by 0.4 per cent in March after rising 0.4 per cent in February. Housing credit is up 4.4 per cent on a year ago – equalling the weakest annual growth in records going back to 1976
• Slovenia has been downgraded to sub investment grade, which might raise fears that any Slovenian bailout by the Euro area would follow the template of Cyprus and include bailing in bank depositors and increasing risks (and costs) associated with other bailouts.
• Spanish unemployment has risen beyond 6m people for the first time since records began, underlining the depth of the country’s economic suffering and raising pressure on European leaders to address the social crisis spreading across the continent.
• France also reported record unemployment figures on Thursday, with the number of jobseekers looking for work rising for the 23rd month to 3.2m in March, surpassing the previous peak in 1997.
Where to start this week?!
• On Monday Ms Gillard revealed the government needed to plug a $12 billion shortfall in the budget. Chief among Labor's budget headaches was figuring out how to pay for the National Disability Scheme - estimated to cost $15 billion a year.
• Mr Abbott accused Ms Gillard of a broken promise and changing its mind on how to fund the NDIS (via an increase in the Medicare levy).
• In turn Ms Gillard accused Mr Abbott of changing its mind and supporting the increase in the Medicare levy.
• So we arrived at bi-partisan support by both parties agreeing that the other had changed its mind and had broken some promises!! (and we only have 5 more months of this to go !)
• Speaking of the election, the latest Newspoll survey showed Labor losing 19 seats at the next election to 53 and the Coalition ending up with 92
If you would like to discuss this week's wrap in further detail please do not hesitate to contact your Financial Adviser on 02 9324 8888 or alternatively send an email to email@example.com