5 Apr 2013
• Markets continued their poor run from last week as US economic data was weaker than expectations, with both the Aussie and European share markets at their lowest levels in a month.
• Markets continued to be volatile as the effects of the Cyprian bail-out are digested and Italy failed to form government, meaning they will most likely return to the polls.
• The negative sentiment was continued by the concerns regarding North Korea and their escalation of force towards their neighbours in the South and the US.
• Resource stocks continued to struggle as commodity prices fell and no new positive news has emerged from China.
• Precious metals were especially hit hard (gold, silver, platinum) as inflation fears have subsided and economic growth in the US continues to improve, along with very strong action by the Japanese to stimulate every part of their economy.
• The Australian dollar has continued to rise this week getting close to the 1.05 level against the US dollar… Result of the RBA not cutting rates and the trade deficit narrowing as export values rose strongly whilst import values fell.
• The RBA kept the cash rate on hold (3%) as signs of the effect of low rates begin to make its way through the economy….though at a much slower pace than expected. They remain concerned about the high Aussie dollar and may cut rates again if the upcoming inflation number is low.
• Australian population growth has re-accelerated (a positive for the economy) largely as a result of a pick-up in net overseas migration. There was also a rapid increase in births of over the past year, which our now at their highest levels on record.
• Credit growth in Australia continues to remain soft, and is now at its equal slowest pace since August 2011. Deposit growth is also wanning, now at its slowest rate since September 2010, but double the pace of credit growth.
• Job vacancies (as reported by the Australian Bureau of Statistics) dropped 10% in February – their sharpest fall since 2001….this usually spells signs of a pick-up in unemployment.
• House prices and online retail sales continue to rise, slowly but steadily.
• The European and UK central banks have maintained their cash rates flagging no need to move from their current setting.
• The UK banking regulator has determined that there is a concerning 25bn pound shortfall in capital across the UK banking industry. This will likely result in a further shrinking of bank balance sheets when the economy needs them to be expanding.
• On a more humorous (perverse) note, new reforms in the UK will allow new banks seeking banking licences to open with only 4.5% capital requirement whilst existing banks have a 10% capital requirement.
• Much has been reported about the National Broadband Network (NBN) this week…..the pick of the reports was that NBN Co had awarded more than $1bn in extra work to the major contractors it previously criticised for errors and failing to meet deadlines.
• The Federal government has finally released their planned changes to superannuation after a week of further political suicide…..those drawing an income of $100,000 or more a year will have their earnings on their balance taxed at 15%.
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