2 Aug 2013
• The Australian share market had a strong week even after the small blip yesterday when rumours swirled that the Government may impose a large bank levy.
• US reporting season is well and truly in play with approximately 67% of companies beating analyst’s expectations.
• Asian markets had a poor start to the week following some poor economic data from China and some profit taking before a speech by the Bank of Japan governor.
• In stock news, Rio Tinto has agreed to sell its 80% interest in the Northparkes copper and gold mine in Australia to a Chinese company for $820m….looks like a very good deal for Rio.
• Woolworths recorded a strong lift in full year sales, mainly coming from its Australian food and liquor businesses…other divisions didn’t fare so well.
• Leighton Holdings secured a $2.8bn contract to design and build a luxury resort in gaming destination….the contract value is Leighton’s largest ever in Asia and will be complete by early 2016.
• Qantas has indicated that it would hike fares on international and domestic flights as the weaker Aussie dollar has increased jet fuel costs.
• The Aussie dollar fell from close to 93 cents earlier in the week to 89 cents (against the US dollar), which is a 3 year low, following a speech by the RBA governor that hinted at more rate cuts.
• Locally, building approvals fell by almost 7% in June which was against expectations of a small rise. Building approvals are now 13% lower than the same time last year.
• Credit growth in the Australian economy continues to stagnate with annual growth slightly above 3%...not terrible, but not enough to lift the economy.
• A key economic indicator regarding the Eurozone economy hit a 23 month high possibly suggesting that the Eurozone economy is now stabilising…time will tell.
• However, Eurozone lending continues to shrink, with loan growth to the corporate sector going backwards and lending to households remaining flat.
• US consumer sentiment data has risen again as has French consumer confidence, which increased more than expected.
• US house price data continues to impress with annual growth across the country now at 12.2%...strong performers were Dallas and Denver.
• The US reserve bank has not provided any indication as to when they will begin to reduce their stimulus efforts (the market is expecting a September start date), but they implied that economic conditions have recently weakened slightly.
• Japan finally got some inflation (after decades of deflation) with the latest reading being the biggest increase in 4.5 years…the government’s efforts seem to be working.
• Rumours swirled during the week that the Federal Government will levy banks to provide insurance for potential future bailouts and to shore up the budget bottom line…the levy was rumoured to be quite large but has since been revised down. The banks will simply pass this on in the form of lower deposit rates.
• The Business Council of Australia (represents the nation’s top 100 CEOs) has urged both major political parties to embrace meaningful reforms to taxation, industrial relations, foreign investment, and federal/state relations, or risk Australia’s prosperity into the future.
• It was the Federal Opposition’s time in the sun regarding asylum seekers and detention centres….their proposal has provided a potential recovery for the decimated mining services sector and will now look to build detention centres and “camps”.
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