15 Mar 2019
Investors gripped by recession fear
- Global markets finished higher this week, led by US and Europe, whilst the local market is flat.
- Both local and global energy stocks fell following the Norwegian sovereign wealth fund, the world’s largest, announcing they plan to sell their stakes in oil and gas explorers. The fund was created on the back of Norway’s vast oil reserves.
- The share price of Boeing, the world’s largest plane maker, suffered a sharp fall after many airlines and some governments grounded the company’s new 737 Max 8 plan following the 2nd fatal crash in 5 months.
- In local stock news, shares in fund manager Perpetual rose strongly on no news, fuelling speculation they may be a takeover target.
- Lending to Australian households has fallen more than expected with a 2.4% decline in January on the month earlier, but down over 17% compared to the same time last year. Lending to 1st homebuyers is down 13%, with lending to property investors and for renovations down 28% and 34% respectively.
- Australian consumer confidence fell to its lowest level since September 2017 according to a key survey. An unemployment expectations index spiked on concerns regarding potential job losses.
- US data showed the employment market slowed last month with only 20,000 jobs created, the weakest since September 2017.
- US housing starts jumped more than 18%, exceeding forecasts, but the data for December was revised down.
- US consumer price inflation rose last month, in line with expectations, however annualised inflation is now slowing.
- US retail sales rose ever so slightly in January, which was above expectations. However, December data was revised down to show retail sales dropping 1.6% versus previously reported 1.2%.
- China reported a sharper than expected fall in exports in February, down almost 21% from a year earlier. The decline was the largest in 3 years and was well below expectations of a near 5% drop.
- Chinese car sales fell for a 9th consecutive month in February, with data showing the first annual drop in more than 20 years.
- Chinese total social finance (ie. off-balance sheet government lending) was up over 10% at the end of February from a year earlier.
- China’s industrial output growth fell to a 17 year low in the 1st two months of the year. However, retail sales figures were slightly better than expected as was fixed asset investment growth.
- US President Trump told Congress to slash funding for foreign aid and the State Department, and increase spending for the military and the wall he wants to build.
- US President Trump said he was in no rush to complete a trade deal with China and insisted that any deal include how it treats US intellectual property.
- The British parliament again attempted to make things difficult, firstly refusing to agree to the EU’s proposal thus putting the March 29 deadline at risk, whilst also voting down the possibility of Brexit without an agreement. Overnight, they voted to extend the March 29 deadline, with an extension needing approval from the EU.
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