18 Mar 2016
Markets
- Local and global stock markets finished mostly higher with the exception of Europe.
- Chinese stocks rose strongly after the new head of the securities regulator signalled he will keep propping up the equity market, and as large Chinese insurer continued to acquire large US hotel chains.
- In local stock news, Telstra noted that they and San Miguel Corporation have been unable to reach commercial agreements on a possible investment in a wireless joint venture in the Philippines. The investment had been touted as up to US$1bn. The stock price rose as a result.
- Qube and Brookfield Infrastructure Partners have agreed to divvy-up Asciano’s assets, ending a $9.1bn seven month long bidding battle, in an all-cash deal totalling $9.28 per share. Infrastructure, pension, and sovereign wealth funds will also participate in the deal.
- Scentre Group (Westfield Aust & NZ) is raising $745m under its euro funding program with proceeds used to repay debt under its bank facilities. The debt is for 7 years at a fixed rate of 1.375%.
- Oil prices rose after the International Energy Agency said prices may have bottomed and that output could fall. The falling US dollar also assisted.
- The Australian dollar rose against the US dollar, hitting a high of 76c, its highest level since July last year. The result of upward pressure on the Australian courtesy of foreign inflows and downward pressure on the US dollar as the expected pace of US rate rises is questioned.
Economics
- Australia’s unemployment rate has fallen to 5.8% in February beating expectations, following a surprise rise in January. Only 300 jobs were added in February, but the number of unemployed shrunk by 27,300.
- The US Fed chose to leave rates unchanged at their March meeting, preferring to see further improvement in data before making the next move higher, which largely puts an end to their planned four rate rises this year. They did cite some inflation concerns as inflation pushes higher outside of the effects of falling commodity prices.
- US housing starts rose by 5.2% last month, with single family home starts hitting the highest levels in 9 years. Building permits also rose, showing positive signs for the housing market ahead.
- China released mixed January and February economic data with industrial production lower and retail sales, though higher, missing expectations. Fixed asset investment, which has been slowing, actually came in better than expected, probably the result increased stimulus from the government.
- The Chinese central bank is taking action to restrict loans on property down-payments, which is seen as a major source of leveraging concerns in the market.
Politics
- The Australian Senate was on track to pass laws reforming the Senate voting system, paving the way for PM Turnbull to call an early double-dissolution election. After 3 days of stalling and time wasting by Labor and independent senators, the Government and Greens look likely to pass the rules that will prevent micro parties gaming the system to win Senate spots. That would wipe out all independent Senators with exception of Nick Xenophon.
- Greece has indicated that it expects to reach an agreement with creditors by March 25, which would trigger the release of further funds. Without agreement, they will run out of money again.
- German Chancellor Angela Merkel and her centre-right CDU party are in trouble following a poor showing at regional elections. The populist right-wing party Alternative for Germany gained at CDU’s expense. The result is being blamed on Merkel’s pro-refugee stance.
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