28 Mar 2014
• The local share market finished higher this week with positive news reported by some companies in addition to speculation that the Chinese government is readying an injection of stimulus into their economy.
• The US share market moved lower as concerns regarding rising interest rates intensified. European and Asian markets were higher off the back of rhetoric regarding further stimulus for the EU and China.
• In stock news, Westfield announced that it has entered into funding commitments in respect of $22bn of financing facilities. These are required for the proposal to establish Westfield Corp (global assets) and Scentre Group (Aus & NZ assets).
• Macquarie Group announced that it expects to improve its full year result by 40-45%. That’s a big leap, but they are known for their usually conservative guidance numbers. Some took the news positively whilst others thought the announcement was a catch-up from previously released conservative numbers.
• Myer is considering ways to sweeten its $3bn merger proposal for David Jones by taking on debt so it can offer cash as well as shares. This was prompted by the widening gap between the companies’ share prices.
• The Aussie dollar fell early in the week in response to poor Chinese manufacturing data, before rising strongly throughout the week (to 92c). The rise was attributable to rumours that the Chinese government is preparing a stimulus package for the economy. RBA Governor Stevens also gave a speech on the Australian economy which was very up-beat.
• Key leading indicators of the labour market are now all signalling a turn-around in job creation over the months ahead. The unemployment rate was previously expected to rise to 6.5% (from 6% now). This may not eventuate if the positive data continues.
• US home prices to continue to rise with a 10-city index up 13.5% on the same time last year. The housing recovery continues. In contrast, new home sales fell 3.3% in February compared with January’s numbers. Harsh winter weather and higher mortgage rates not helping.
• US consumer confidence rose strongly in March. The key index reading was the best in more than 6 years.
• Eurozone consumer confidence climbed to a 6 year high further supporting recent European share market strength.
• European Central Bank council member and President of the German central bank Jens Weidmann said policymakers were not ruling out a form of quantitative easing (QE) for the Eurozone. Given Germany’s strong stance against it, his comments caught many by surprise.
• Activity in China’s manufacturing sector remained weak in March. A key data reading came in at an 8 month low.
• March manufacturing activity in France expanded at its fastest pace since June 2011, whilst manufacturing activity fell in Germany.
• A plethora of events from around the globe – Turkey’s military shot down a Syrian airplane; Russia mobilised more troops into Crimea (some too close to the new Ukrainian border); the Front National party (nationalists, socialists, far right-wing, anti- globalisation and immigration) performed strongly in French local elections; the world’s top industrial powers threatened further sanctions against Russia.
• Glenn Stevens, RBA Governor, gave governments / politicians around the world-wide a kick up the backside telling them to get their act together and to stop relying on low interest rates to drive long-term growth. He emphasised ensuring environments for competition, innovation and investment are sound.
• The Abbott government confirmed it will sell its 1st major public asset, Medibank Private. There is a list of others to follow. Medibank returned a profit of $315m in 2013.