16 Jan 2015
Markets
- The Australian market fell this week in light of the continuing decline in commodity markets and weak leads from overseas markets, mainly the US.
- Most European markets rose as the European Central Bank moved one step closer to launching quantitative easing (money printing). Asian markets were mixed.
- The Swiss equity market alone fell 8.7% in a day, its biggest fall in 25 years, following the Swiss Central Bank’s surprise decision to stop defending their currency.
- In local stock news, Rio Tinto is eying a US$500m plus investment in an Indian diamond project alongside a potential US$2bn iron ore development in the region. The diamond mine site, which holds 37m tonnes containing 27.4m carats, has made slow progress since it was first discovered in 2004.
- Transurban has delivered marked improvements in toll revenue in the first half on the back of strong traffic growth in Melbourne and Sydney. The group’s half year revenue is up 64% on the same time last year.
- World oil prices fell again this week, hitting a six year low, as further rhetoric emerged from the Saudis and the US shale producers regarding no forthcoming cuts in supply. A US report showed a sharp drop in the oil rig count which would be the biggest weekly fall in 24 years.
Economics
- National construction activity contracted in December for the second consecutive month. Apartment building fell to its lowest level in 16 months and house building fell for the first time since August 2013.
- The number of home loans granted in November fell by 0.7%. NSW and WA were the hardest hit. The result missed forecasts by a wide margin with expectations of a 1.7% rise in the month.
- Total housing finance by value also slipped in November, with the value of investor lending dropping 2.2%. National finance approvals are up 9% on last year’s numbers.
- Australian retail sales figures have come in lower than expected rising 0.1% in November. Information released thus far on the possible December numbers isn’t looking great either. US retail sales for December also disappointed.
- Personal and business finance both fell in November, to their lowest point in 13 months.
- Jobs ads have risen for the seventh month in a row, rising 1.8% in December and 11.4% for the year. The unemployment rate has dropped to 6.1% in December, surprising the market.
- The US economy added 252,000 jobs in December, ahead of market expectations. The previous two months were also revised up by a combined 50,000. The unemployment rate fell to 5.6% from 5.8%. However, wages were lower, falling from the previous month.
- US job openings rose to 4.97 million in November. Openings are now up 21% from the previous year and at levels not seen since 2001.
- China’s trade surplus came in ahead of forecasts for December on the back of better than expected exports and imports. Exports rose strongly at 9.7% in December, which was up from a 4.7% rise in November, and well ahead of expectations.
Politics
- Greek polls continued to show that the far left Syriza party (anti-European Union and anti-austerity, pro-debt forgiveness) is leading by a small margin and would need to seek alliances to form a government. They have been progressively softening their anti-European Union stance, but Spain and Italy are eagerly awaiting the outcome as their governments fight off their own threats from far left parties.
- The Swiss National Bank announced it would no longer defend the 1.20 Swiss franc to euro floor it has been holding since 2011. The Central Bank had tried to keep the currency from appreciating too far and hurting Swiss exporters. The move comes ahead of the expected launch of the European Central Bank's quantitative easing program that will make it increasingly harder to depress the price of the franc. The franc soared against the euro and the dollar on the news.
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