14 Jun 2019
Aussie stocks move higher on weaker economic data
- The Aussie equity market hit an 11.5 year high this week, buoyed by the expectation of further RBA rate cuts.
- Global markets were mixed, the most finishing flat for the week.
- In local stock news, The Star Entertainment Group share price fell sharply after the casino operator flagged a full year earnings dip and continued weakness in international VIP spending.
- AGL Energy made a new $3.02bn offer for internet/telecoms provider Vocus, less than a week after a Swedish private equity firm walked away. The AGL offer is much higher than expected, which speaks to how tough the energy market is right now.
- Wesfarmers provided a weak update of its retail division with Target continuing to underperform as retail conditions worsen. The negative sentiment saw the rest of the retail sector fall with JB Hi-Fi, Myer, and Harvey Normal all lower. Wesfarmers also announced the acquisition of Catch Group, an online shopping platform, at a price that appears pretty full.
- A volatile week for oil with initial strong fall on fears of weak demand and high US stockpiles, and then a subsequent rise as Middle East tensions escalated.
- The number of new loans granted to owner-occupiers for April fell 1.1%, missing expectations of a flat result. This follows the 3.3% decline in mortgage lending in March.
- Australian business conditions weakened again, whilst business confidence surged from very weak levels. An election result can lift confidence, but real action is required to lift business conditions.
- A poll of Australian businesses has noted that conditions in the retail sector were deteriorating and now at the same levels as during the GFC.
- Australian jobs data showed unemployment holding steady in May at 5.2%.
- US hiring slowed in May as employers added just 75,000 jobs as business owners became more cautious on slowing global growth largely caused by trade wars. The unemployment rate remained at a 50 year low of 3.6%.
- Data showed US producer prices increased solidly for a 2nd straight month in May, as producers are beginning to pass on tariff costs and rising input costs.
- The market is betting the US central bank will cut interest rates in July and cut 2 more times this year as the impacts of trade wars adversely impact economic data.
- China eased financing rules to boost local government spending on public works.
- US President Trump says he may renew his tariff threat against Mexico if they don’t cooperate on border issues. The initial 5% tariff threat appeared to work in terms of some concessions made by Mexico regarding border control. If tariffs eventuate, US consumers will be particularly hard hit via increased prices.
- President Trump said he was the one holding up a trade deal with China and had no interest in moving ahead, unless China agrees to 4 or 5 major points. Trump said he would impose more tariffs on Chinese imports if there was no progress in talks at the G20 summit later this month.
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