18 Apr 2019
Equities push higher on improving Chinese data
Markets
- Equity markets moved higher this week on improving Chinese data, a nearing trade war resolution, and on a reasonable start to US reporting season.
- US company 2nd quarter reporting season got underway with reasonably better results than expected thus far. Early days yet. Expectations leading into the season were pretty low.
- In local stock news, iron ore miners saw their share prices fall this week following an earlier than expected approval by a Brazilian court to allow Vale to recommence production, following a series of mine safety issues, which saw iron ore supply fall resulting in the iron ore price skyrocketing higher.
- Rio Tinto shares were also adversely affected by the miner’s quarterly update, which showed a material drop in production following a fire and weather related events. The company had flagged this would be likely earlier in the year.
- BHP reported a weaker than expected March quarter, with production across a range of commodities coming in below broker forecasts. In addition, the company reported higher unit costs from their thermal coal and iron ore operations.
- Dulux Group shares soared after Japanese paint giant Nippon made a $3.8bn offer to buy the company for $9.80. Dulux shares were already trading expensively prior to the offer. Japanese companies cashed up and borrowing rates extremely low.
- The oil price pushed higher during the week on continued supply cuts from Venezuela and Iran, the Libya conflict, and upbeat economic data out of China which could lift demand for oil.
- The Aussie dollar moved higher during the week on improving Chinese economic data.
Economics
- Chinese data showed exports rebounded to a 5 month high in March, but imports shrank for a 4th straight month and at a faster pace. Exports rose over 14%, nearly double what economists expected.
- Chinese industrial output expanded 6.5% in the 1st quarter on the same time last year, which was above expectations. March output was up 8.5% on a year earlier, the fastest monthly pace since July 2014.
- Chinese retail sales were up nearly 9% in the month, which reversed some recent downward trends.
Politics
- Sources indicated that US trade negotiators have softened their demands that China curb industrial subsidies as a condition for a trade deal.
- Australian federal election campaigning continued this week, with plenty of misinformation, uncosted promises and uncosted figures, misunderstood questions regarding new policies, and climate change barbs which did nothing to fully inform voters.
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