1 Mar 2019
Stocks buoyed by nearing trade war resolution
- Local and global equities finished higher this week buoyed by a nearing resolution to trade wars, better than expected 4th quarter US economic growth, and the US Fed pausing their balance sheet contraction.
- In local stock news, Australian company reporting season continued this week with some pretty severe market reactions to both positive and negative news. In daily moves, QBE was up over 4%, Lendlease was down over 6%, Bluescope up over 6%, G8 Education down 11%, and Hub24 down 14%.
- Brambles was up close to 3% during the week after the company announced the sale of its plastic containers business IFCO.
- Shares in oOh!media were down sharply after the outdoor advertiser reported that its full year profit fell 4%. The market reaction appeared extreme, with investors reacting mostly to forward looking guidance.
- Seek shares pushed higher as investors were impressed by a 21% jump in revenue. Investors had previously been concerned about the level of investment the company was undertaking which had hurt short term earnings.
- Ramsay Healthcare’s share price rose strongly after the company reported an increase to profit whilst sticking to their full year guidance.
- Rio Tinto has announced $5.6bn in special dividends, reporting a 2% rise in underlying profit which beat expectations. The special dividend comes on the back of 5 asset sales last year.
- The Aussie dollar fell this week on weaker Chinese manufacturing data.
- The total value of Australian construction fell 3% in the 4th quarter of 2018, which was worse than the same time the year before. Engineering was the biggest contributor to the fall. The overall result was driven by weak residential building conditions.
- US economic data came in better than expected for 2018, with 4th quarter growth well below the 3rd quarter print but above 4th quarter expectations. The central bank’s preferred measure of inflation came in well below target.
- The US central bank chairman Jerome Powell said that the bank would remain patient in deciding on further interest rate hikes, and that rising risks and recent soft data should not prevent solid growth for the economy this year.
- Chairman Powell told congress that the bank would stop shrinking its $4 trillion balance sheet this year. This follows comments earlier in the year that that were re-assessing the pace of the money printing unwind.
- German economic data continued to print weak, with the country only just avoiding recession in the 4th quarter on the back of higher government spending.
- China’s manufacturing sector continued to slow in January with data in contraction territory. New export orders also fell on the back of weak global demand.
- US President Trump tweeted that talks between the US and Chinese negotiators had progressed and he was delaying an increase on US tariffs on China scheduled for 1st March.
- UK PM Theresa May has delayed a vote on the government’s final Brexit deal that was scheduled for this week until 12th March. The delay is either part of a strategy to push all parties to the brink or a function of them being no closer to agreement. At this stage, an extension to the deadline remains likely.
- India-Pakistan tensions rose after Pakistan shot down 2 Indian jets and carried out air strikes in Kashmir. India launched an air strike on what it said was a militant training base.
- US and North Korean officials failed to agree on steps toward North Korean denuclearisation after a disagreement over the lifting of sanctions on the country.
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