23 Oct 2015
- Markets trended sideways for most of the week on mixed US reported earnings, before the European Central Bank shot off a bazooka, clearly indicating they stood ready to increase the size and length of their stimulus measures if emerging market volatility threatened its goals.
- Equity markets across the global rose strongly as a result.
- In local stock news, Rio Tinto has delivered a strong lift in 3rd quarter iron ore production and says its balance sheet has been strengthened by strong cash flow and recent divestment activity.
- Santos announced that the first shipment of LNG from its US$18.5bn GLNG project has left and is bound for South Korea. Santos was also subject to a very opportunistic takeover bid, which the board has unanimously rejected (rightly so). The news did push the stock up more than 20% at one point.
- BHP Billiton has delivered record quarterly production of iron ore and has reaffirmed its full year guidance across all its businesses, despite a slip in copper and petroleum production. They expect iron ore production from their WA operations to increase significantly from here due to better productivity.
- Insurance Australia Group’s leadership exodus has continued with the Chairman jointing the CEO on the outgoing list. This follows independent director leaving in September and the company secretary leaving this month. The recent exodus follows news that key institutional shareholders (fund managers) “blocked” the company’s moves to spend up big on Chinese assets.
- Crown Resorts had their AGM announcing net profit after tax of $525m which was down 18% on last year. The fall was mainly driven by falls in profit in their Macau operations. However, the group’s earnings were up 5.4%. Crown Melbourne’s results were strong.
- The Reserve Bank of Australia has welcomed signs of a slowdown in mortgage investor lending in Sydney and Melbourne, but also warned of growing risks in commercial property.
- The European Central Bank President said that if the emerging market volatility was threatening the bank achieving its inflation and growth goals, that they would review the size, duration and composition of its quantitative easing program at their December meeting.
- US retail sales were up slightly in September. August sales numbers were revised down to show no growth in that month. On an annual basis, overall sales were up 2.4% or 4.9% excluding petrol.
- US housing starts rose 6.5% in September from August levels, well above expectations. The increase was driven by a strong increase in apartment construction.
- China’s economy grew faster than expected in the third quarter, with official data showing the economy expanded 6.9% year over year, which was a little better than market expectations. The stronger number may have removed the chance of any government stimulus at least in the short term.
- The Japanese trade balance for September saw the country record its 6th consecutive trade deficit which heightens the risk that Japan has fallen into its 4th recession since 2008. More Japanese stimulus looks likely.
- The Coalition has surged to a commanding lead over Labor under the leadership of Malcolm Turnbull whose own personal ratings have soared. The latest poll shows the Coalition leading Labor on a two party preferred basis by 53% to 47%, the largest lead since the Coalition won the 2013 elections. The same poll taken two months ago had Labor leading by 54% to 46%.
- The federal government has called on APRA (the bank regulator) to take additional steps to ensure their capital adequacy. The government agreed with the financial system inquiry report’s recommendations and endorsed APRA’s role in implementing these new regulations.
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