24 Apr 2015
- The Australian market fell for most of the week before rising strongly to finish higher. Concerns arose abroad regarding Greece’s continued inclusion in the European Union before the Australian market pushed higher on the back of higher commodity prices.
- US markets pushed higher as investors sold their European equity holdings on Greek concerns and sought safety in US corporates. The tech-heavy Nasdaq exchange broke through 15 year highs.
- Asian share markets pushed higher, with the exception of India, following new economic stimulus from China. The Chinese market recovered following a sharp fall as China’s securities regulator warned investors not to borrow money or sell real estate in order to buy shares.
- In local stock news, rail and port owner Asciano stated it hauled less coal last quarter than in the same period a year earlier following disruptions to services in NSW. However, the company reaffirmed its full year guidance and is on track to lift underlying earnings by more than 5%.
- Rio Tinto delivered strong growth in first quarter iron ore sales and production despite coming in short of analysts’ expectations. In the first three months, RIO’s global iron ore production increased 12% on the same time last year.
- Leighton Holdings approved a name change for the company after it reaffirmed its full year guidance at its annual general meeting. There have been significant improvements to the group’s profit margin in the March quarter. The company will now be known as CIMIC.
- BHP Billiton provided its operational review for the nine months to the end of March with production up 9%. Production records were achieved for ten operations and five commodities, in addition to a 20% lift in its quarterly iron ore output. BHP now extracts iron ore at a cost below US$20 a tonne. The company is in very good shape.
- Iron ore prices jumped this week after BHP Billiton curbed the pace of its expansion program, slowing the final stages of the US$120bn race by the world’s biggest producers to raise output. BHP has deferred its planned US$600m project to reduce bottlenecks, thus reducing supply.
- Australian inflation rose by 0.20% in the March quarter for an annual rate of 1.3%, its lowest rate since 2013 and well below the RBA’s target band of 2-3%. Cheaper petrol, fruit and vegetable prices were the key factors, increasing the chance of an RBA interest rate cut.
- Data signalled US inflation had begun to firm. The increase in all prices was slightly below expectations, but the key core measure (stripping out volatile items) was slightly above expectations.
- US existing home sales rose to an 18 month high in March, a 6.1% rise from February and beating analyst expectations. However, new home sales fell by 11.4%, the biggest drop since July 2003.
- China’s central bank said it is cutting its bank reserve requirements by 1% in order to free up capital to boost lending against a backdrop of slowing economic growth.
- The Greeks asked the International Monetary Fund (IMF), one of their creditors, if they could miss a payment. A quick rebuke ensued from the IMF, forcing the Greek government to raid the bank accounts of local governments and state owned businesses to meet the payment. They have one more raid left which will keep them afloat til June. All bets are off thereafter.
- Prime Minister Tony Abbott has put an end to speculation over the future of negative gearing by promising there will be no changes. Fair to say the construction industry and investors were pleased. It may be off the agenda for the PM’s next term, but it won’t go away given it’s one of our most inequitable taxes, largely benefiting the rich whilst encouraging speculative investment. Again, reform is needed.
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