24 Aug 2018
Coalition spill leads to new PM
- Global equity markets finished higher this week as companies continue to report strong results, with the US equity market hitting a record high and equalling its longest ever bull run.
- US corporate earnings, buoyed by strong economic conditions, have come in strongly with earnings growth running at 25% and revenue growth at almost 10%. The growth rates are even higher for US exporters.
- In local stock news, Woolworths posted a solid full year result but flagged a slowdown in sales thus far in the new financial year, laying blame on its decision to remove free shopping bags from stores.
- BHP reported underlying profit up 33% and also announced a record final dividend of 86 cents. The result, whilst strong, underwhelmed heightened analyst expectations.
- Sydney Airport’s 1st half result was in line with market expectations, with the company reaffirming its dividend guidance for the year ahead whilst lowering its capital expenditure guidance.
- The telecoms sector rose strongly after it was revealed that TPG was in talks with Vodafone on a possible merger.
- Energy stocks came under pressure after the Australian government stepped back from legislating a commitment to Paris treaty emissions reductions. The step-back, along with a culling of proposed business tax cuts, set in motion the challenge for PM Turnbull’s leadership.
- The US central bank released the minutes of its last meeting indicating the need for raising rates soon given underlying economic strength, but also making mention that trade disputes are firmly in their considerations.
- US consumer sentiment fell to an 11 month low in August, with consumer expectations of the period ahead taking a rather large hit, but remaining in positive territory. US leading economic indicators remain very strong.
- Eurozone inflation increased to 2.1% in July, coming in above the European central bank’s target.
- President Trump and Kim Jong Un signed a joint document pledging to work toward complete denuclearisation of the Korean Peninsula, with the US surprisingly committing to provide security guarantees for its old enemy.
- China and the US imposed tariffs on $22bn worth of each other’s goods, despite ongoing talks between them.
- President Trump continued his criticism of the US central bank and its Chairman whilst accusing China and Europe of manipulating their respective currencies. He went one step further at a rally, proposing to slap 25% tariffs on any European made car that comes into the US.
- Italy’s new Prime Minister reiterated his promise to implement the coalition government’s main policies including cutting corporate and individual tax rates to 15% and expanding welfare benefits to the country’s poor and unemployed. The moves would drastically worsen their already large budget deficit, putting them on a collision course with Eurozone partners.
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