12 Apr 2019
Equity markets mixed as US reporting season gets underway
- Equity markets were mixed this week with US tech stocks pushing the broader US market higher, European markets were mixed, whilst Asian markets were lower.
- The Aussie equity market pushed higher, supported by energy stocks early in the week on rising oil prices, before banks managed a surge today.
- US company quarterly reporting season got underway this week. Expectations are reasonably pessimistic at this stage, with zero to slightly negative earnings predicted on aggregate, which would be the 1st year on year contraction since 2016.
- In local stock news, Crown shares surged after the gaming firm confirmed global casino owner and operator Wynn was discussing a takeover proposal in cash and shares. Wynn subsequently pulled out of discussions as they weren’t happy with the leaked news.
- Bank of Queensland shares fell after the regional lender cut its dividend following an 8% fall in 1st half cash earnings. Be wary of dividend traps when dividend yields appear high.
- The oil price moved higher this week on supply concerns as conflict intensified in Libya.
- The US added 196,000 new jobs in March, coming in above economists’ forecasts. However, wage increases slowed in March, meaning the new jobs weren’t inflationary.
- Initial US jobless claims dropped last week to their lowest level since 1969.
- China has said it would relax residency restrictions in many of its smaller cities and increase infrastructure spending to boost economic growth. The government also announced measures to encourage financing for small and medium sized businesses.
- German industrial output rose in February, however, this data followed a slump in manufacturing orders.
- German exports and imports fell more than expected in February, showing further signs that Europe’s biggest economy is slowing.
- The Italian government looks likely to cut its 2019 economic growth forecast to just 0.1%, following a 1% growth forecast they issued in December.
- The International Monetary Fund (IMF) cut is global economic growth forecasts for 2019, citing a potentially disorderly Brexit as a key risk. Headlines and markets took notice, which they shouldn’t have, as the IMF’s forecasts are rarely accurate and usually too late.
- PM Scott Morrison called the next federal election for May 18. Campaigning has already begun.
- The UK and the European Union (EU) have agreed to a flexible extension of Brexit until October 31. The UK had requested a June 30 extension, with the EU forcing a longer extension in light of the state of current UK politics. European parliamentary elections are held next month.
- The US’s trade war machine turned their attention to Europe threatening to slap tariffs in retaliation to more than $11bn of EU subsidies to Airbus.
- China has promised the EU that it will no longer force foreign firms to share sensitive know-how when operating in China and was ready to address industrial subsidies.
- A Chinese news source reported that the Chinese President had sent a letter to President Trump indicating that substantial progress had been made in trade talks and calling for negotiations to be wrapped up as soon as possible.
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