26 Sep 2014
A WEEK OF LOSSES AS EUROPEAN DATA DISAPPOINTS & NO CHINESE STIMULUS
Markets
-
The Aussie share market finished lower for the week following the poor lead from the US market and concerns that the Chinese government may not support economic growth with the amount of stimulus previously expected.
-
Asian and European markets also finished lower, the latter due to poor economic data from Germany and France.
-
Global markets are still trying to make sense of the mixed messages from the US central bank, as investors get to caught up in when the first rate rise may be. It’s the pace of the rate rises and that matters.
-
In overseas stock news, Alibaba, the Chinese internet based e-commerce business listed on the New York Stock Exchange after raising US$21.8bn ahead of the listing. The stock listed with a market capitalisation of US$167.6bn, the biggest ever in the US. The stock was up 38% on its first day.
-
In local markets, the ASX announced that activity levels since the end of the financial year have been softer than usual, even with $10.1bn of new capital raised. The low interest rate environment and the low levels of volatility are the cause.
-
QBE has appointed its finance chief to its board. The board appointment (a good move) marks a big change at QBE given his predecessor was not on the board. Looks like the chairman is sending a message that the board will keep a much closer eye on the company’s finances.
-
The iron ore price tumbled below US$80 a tonne this week to its lowest price since September 2009. The fall this week comes after last week’s rally where the price reached above US$85.
-
The Aussie dollar remained below the 90c barrier against the US dollar, falling as low as 87c, as the US dollar continues to rise.
Economics
-
Australian online skilled job ad volumes grew at 3.8% in August marking a rise of 12.8% on the same time last year. NSW and Victoria continue to lead the charge in new job ad volumes.
-
Residential property buyers are battling for fewer properties as recent data shows that the number of properties listed for sale in all capital cities (excluding Perth) is 11.6% lower than this time last year. The fall was driven by sharp falls in Sydney, Melbourne and Adelaide.
-
US existing home sales fell 1.8% in August from July levels, below economists’ expectations, to an annual rate of 5.05 million. Sales were down 5.3% on this time last year.
-
In contrast, new US home sales surged by a surprising 18% in August to the highest level in 6 years. Despite the rise in sales, the stock of new houses lifted to a 4 year high.
-
Germany’s manufacturing sector grew at the slowest rate in 15 months, while factory growth in the entire Eurozone hit a 14 month low . German business sentiment it at its lowest level since April 2013.
-
Activity in China’s manufacturing sector beat expectations in September, but the overall reading was hardly anything to get excited above. Though expansion in activity is always better than the alternate.
Politics
-
The Reserve Bank of Australia is weighing up whether to force banks to adopt New Zealand-style limits on mortgage lending to cool an overheating housing market. With the central bank this week escalating warnings about a potential investor-fuelled bubble, Treasurer Joe Hockey conceded on Thursday there were “clearly significant†price gains in parts of Sydney, Melbourne and “to some degree†in Brisbane.
-
The Group of 20 (the world’s biggest economies) finance ministers, meeting in sunny Brisbane, say they are close to the goal ofintroducing measures designed to boost global economic growth by 2% by 2018. Plenty of genuine banter and grand statements coming from the forum, but don’t expect much action. Yes, the world is as globalised and interlinked as ever before, but self-interest still carries much more weight.
