2 Apr 2015
Markets
- Markets rose strongly early on this week on the back of continued Chinese economic stimulus, before fading away following stalling Greek/Eurozone negotiations and mixed US economic data.
- In local stock news, Ansell Limited will buy a UK based protective clothing manufacturer for $113m. The company has sales in more than 75 countries, a manufacturing facility in China and about 750 employees worldwide.
- Telstra placed a US$1bn bond issue in the United States at an interest rate of 3.125%. Corporates continue to take advantage of low borrowing costs.
- Small iron ore miner BC Iron has been given a temporary reprieve from falling commodity prices, with the WA government allow them to delay paying millions of dollars in royalty payments to the state.
- The Australian dollar fell to 75c against the USD following firming expectations for a US interest rate rise sooner rather than later, along with firming expectations for an RBA rate cut in April or May.
Economics
- Australian sales of new homes hit a high in February, driven by apartments, while detached home sales continue to decline.
- Mixed US economic data continued. Fourth quarter economic (GDP) growth grew at 2.2%, below expectations by economists. Consumer spending and exports were revised upwards, but consumer sentiment fell.
- The US central bank chair, Janet Yellen, reiterated that rate increases could occur sometime this year, but increases would be rather gradual with the central bank not wanting to repeat experiences of Japan in raising rates too early and too quickly.
- Japan’s core inflation has fallen to 0%, the first time it has reached that point in nearly two years and slowing for its seventh consecutive month. Not surprising given real reforms are required if quantitative easing is to be successful, and there are no reforms in sight.
- Chinese officials indicated there is room to easy monetary policy (interest rates) to help boost economic growth. China’s official gauge for manufacturing activity picked up in March, indicating the sector has managed to return to expansionary territory.
Politics
- Former federal Labor stalwart Martin Ferguson is facing moves to expel him from the party for supporting the Coalition over power privatisation during the NSW election campaign. The first time in a long time a politician has spoken the truth... we need more Martin Fergusons.
- The $20bn sale of the NSW poles and wires electricity assets is largely guaranteed now that Fred Nile has given his commitment to back it. There were concerns previously that the approval required from the NSW upper house would be hamstrung by minority parties.
- The Federal Treasurer has released a discussion paper on Australian tax reform canvassing a wide range of issues including income tax, company tax, the tax treatment of superannuation, dividend imputation, capital gains, the rate and scope of the GST and international tax issues. Click here to read more on this discussion paper.
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