12 Jul 2013
•The Australian share market has had a very good week following last week’s poor start to the financial year.
• Markets were buoyed as the US Federal Reserve released the minutes from their last meeting showing that the US economy still has a lot to do before all stimulus is removed.
• Global markets also had a strong week with gains in Europe, the US (three week high), and Asia (notably Japan). US technology stocks are at their highest levels in 12 years.
• In stock news, Transurban Group (toll roads) reported strong numbers on the back of strong traffic growth across all its toll roads.
• The oil price has continued to rise as concerns continue regarding Egypt – no doubt you would’ve noticed the incredibly high petrol prices over the last couple of weeks.
• The iron ore price also continues to rise as Chinese demand has held up better than most expected and as India has introduced a massive increase in royalties on iron ore mined domestically hurting supply.
• The Aussie dollar rose from lows around 90 cents to 93 cents against the US dollar following the US central bank governor’s statement that the US needs very stimulative policy for the foreseeable future.
• We again had stronger employment data out of the US and consumer credit numbers for May were well and truly ahead of forecasts and the previous month’s recording.
• The US government revised down its forecast for economic growth in 2013 from 2.3% to 2% - in stark contrast to the US central bank who is thinking of reducing some of the stimulus at the end of the year.
• The International Monetary Fund (IMF) has downgraded its 2014 growth forecast for China, Australia’s number one trading partner. The downgrade was expected.
• Earlier in the week job ads (a key indicator in employment conditions) in Australia continued to fall (a negative) and we had unemployment rise to 5.7% - higher than expectations but not surprising given the announced job cutting by companies over the last couple of months.
• The negative employment data adds further pressure on the RBA to cut the cash rate at the August meeting.
• Business trading conditions locally remain in negative territory with taxes and government charges the biggest dampeners on investment. Overall business conditions slumped to their lowest level in more than 4 years.
• The troika (European Commission, European Central Bank, International Monetary Fund) have agreed to a tentative deal with Greek politicians in order to disburse the next round of funding – the deal calls for thousands of job cuts in the public sector…..it’s not going to be pretty on streets of Athens.
• Pressure has increased on the federal government to block the takeover of Graincorp by US agribusiness giant ADM….NSW farmers and National MPs are running scare campaigns….the deal will actually benefit most farmers and Australia’s wheat industry as they now both have a global footing and support from a much larger company.
• An extraordinary war of words has erupted between the nation’s two casino giants, with Echo Entertainment chairman John O’Neill accusing rival James Packer of privately denigrating the Queensland government and questioning investment bank UBS’s scruples…who would’ve thought….
• The former Australian Rugby Union boss claims that at a later meeting, Mr Packer said Crown would not expand into Queensland if Echo “behaved” itself in NSW…..that’s definitely one out of his father’s play book….
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