10 Jan 2020
Equity markets move higher as US-Iran aggression subsides
- Local and global equity markets rose for the week, helped by the possible end to US-Iran aggression and by confirmation that a US-China phase 1 trade deal will be signed next week.
- Oil prices spiked but then ended the week lower as US-Iran aggression seems to have ended for now.
- The Australian dollar fell against the US dollar as a result of rising US-Iran tensions.
- Australian building approvals rebounded in November with units and townhouses driving total dwelling approvals up by almost 12% after a terrible October.
- Australian job vacancy numbers for both the private and public sectors rose in the three months to November, following falls in the previous two quarters. However, vacancies were still well below the same time last year with competition for jobs rising as the participation rate rises.
- Australia’s trade surplus widened to $5.8bn in November, fuelled by higher mining exports, and likely weakening in imports, as domestic demand remains sluggish.
- US manufacturing experienced a bigger than expected dip in December with US factory activity contracting by the most in more than a decade.
- Data showed that new orders for US-made goods fell in November, with steep declines in demand for machinery and transportation equipment. However, non-manufacturing sector activity for November came in better than expected.
- The US trade deficit contracted in November with the goods trade deficit with China tumbling more than 15%, obviously in light of trade negotiations and concessions.
- Eurozone core consumer inflation recorded a 1.3% increase in December on the same time in 2018. The reading was higher than the 1% reading for November, but still remains below the central bank’s target.
- US-Iran tensions have risen on the back of US’s assassination of the head of Iran’s Quds Force just outside of Iraq’s major airport. The US has long wanted to quell the Quds presence in the Middle East, but the assassination came after the US embassy in Iraq has been under attack by Iranian-backed actors. Iranian subsequently fired back hitting US military bases in Iraq.
- The phase 1 trade deal between the US and China will be signed next week in Washington. President Trump has said that his administration will start negotiating a phase 2 trade agreement soon, but that he might wait to complete any agreement until after the November election.
- Prime Minister Scott Morrison and his government continue to be under immense pressure regarding the bushfires in NSW and Victoria. Whilst devastating, it's not a federal issue – ie. the cause, response and aftermath are all state issues. Federal assistance can always be requested and provided where required.
- British MPs have approved legislation to allow Britain to leave the EU on January 31. A spokesman for British PM Boris Johnson has said that the government has no plans to extend the transition period beyond December 2020. However, the European Commission chief has said there’s no way a full trade agreement can get completed before that date.
- Spain finally has another government with the Socialist leader securing parliamentary backing by a tight margin to form a coalition government. The coalition will have a slim majority in parliament.
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