6 Apr 2018
Markets jumpy over further tariffs
- Local and global equity markets finished higher this week, with the exception of Asia.
- Expectations for the 1st quarter US corporate earnings season have been ratcheted higher yet again by analysts who are now expecting earnings for the largest 500 companies to grow at circa 18% in the quarter. It will be the first quarter that fully incorporates the new tax laws.
- In local stock news, Santos received a 3rd takeover approach by an overseas private equity firm. Based on stock price movements post the announcement, the market doesn’t appear overly convinced the offer is sweet enough to get the board over line.
- The iron ore price continued to come under pressure this week with some traders citing comments from the Chinese President urging local governments to speed up efforts to reduce debt, raising concerns that investment in industrial and manufacturing sectors could slow.
- The Reserve Bank of Australia left rates unchanged at 1.50% this month. Members remain comfortable with their settings versus current and expected conditions.
- The US central bank’s preferred measure for inflation rose as expected for the month, with the annualised figure edging up slightly but still below the bank’s target.
- A US employment report showed private companies added 241,000 jobs in March, with the figure coming in above expectations.
- Eurozone unemployment fall to 8.5% in March whilst inflation in the region rose to 1.4%, which is the first pick up in prices in 4 months.
- German economic data was positive with unemployment falling to a record low and inflation rising to an annualised pace of 1.5% in March.
- A range of other European economic data was negative with manufacturing, retail sales, and industrial orders all printing below expectations.
- President Trump renewed his attack on Amazon with various reports suggesting he is exploring ways to change the company’s tax treatment or hit the company with antitrust action.
- The Chinese finance ministry announced a string of retaliatory tariffs on a range of US goods ranging from 15-25%.
- New reports have President Trump not happy with China’s retaliatory response whereby he’s ordered the US trade department to consider an additional US$100bn in tariffs on Chinese goods.
- North and South Korea will hold their first summit in more than a decade, after the North Korean leader pledged his commitment to denuclearisation.
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