11 Dec 2015
>Markets
- Equity markets fell globally, spooked by falling oil prices and weak trade data out of China.
- In local stock news, corporate takeover activity arose in the Australian market, with Broadspectrum (the renamed Transfield) receiving a bid from the Spanish company Ferrovial, whilst Dexus has made a cash and shares offer for Investa Office Fund in order to build one of Australia’s largest real estate investment trusts.
- NAB accelerated the split and IPO of the Clydesdale Bank in the UK with shareholders set to vote whether to approve the proposal. Shareholders will receive one Clydesdale bank share for every four NAB shares held. Shareholders with 2,000 or fewer NAB shares can elect to sell their Clydesdale shares into a sale facility before the shares begin trading.
- In oil news, oil prices took another leg lower as OPEC announced that it will raise its production ceiling to 31.5m barrels of oil per day. The move is aimed at maintaining market share. Rumours prior to the meeting had plenty of other OPEC members pushing the Saudis to agree to production cuts given worsening government budgets.
- Iron ore traded below US$40 a tonne, the lowest price since 2005. The iron ore price is now down 80% since peaking in 2011. The reasons for the decline are clear, however, disagreement remains on how long the price can remain at current levels and whether conditions will worsen next year.
Economics
- Australia’s unemployment rate unexpectedly dropped to a 19 month low of 5.8% in November, despite a big jump in the number of people looking for work. The total number of people with a job rose 71,400 in the month, following the large and unexpected 56,000 gain in the previous month. This puts jobs growth at its strongest since the 1980s.
- Australian economic growth expanded 0.90% in the third quarter with net exports (iron ore, oil and gas) contributing 1.5% to economic growth in the quarter. However, domestic demand contracted 0.5%, the largest fall since first quarter 2009, and business spending retreated to its lowest level since mid-2011.
- Australian home loan approvals fell for the first time in five months in October, but fell less than market expectations. The result came after a rise in approvals in September.
- The Australian residential property market is cooling with key data showing auction clearance rates at their lowest level this year at 59%. In Sydney, the clearance rate fell for the tenth consecutive week. Nationwide auction volumes fell to 3,209 from 3,729.
- Retail sales had a reasonably robust October, coming in above market expectations, with growth concentrated in department stores (heavy discounting) and for household goods. Sales were the strongest in NSW.
- The US economy added 211,000 new jobs in November, thus putting further pressure on a December rate rise from the US central bank.
- Chinese trade data showed that imports fell by less than expected, but still recorded a fourteenth straight month of declines. Export numbers also fell, showing weak foreign demand.
Politics
- The federal government and the states have broken a key impasse (i.e. sense has prevailed) in agreeing to look at giving the states a set percentage of income tax in return for the Commonwealth keeping all the extra proceeds from an increased GST. Looks like serious tax reform is near.
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