4 Dec 2015
Markets
- Share markets fell globally after the European Central Bank’s announced stimulus measures were smaller than the market had been anticipating.
- In local news, the Brazilian government has commenced legal proceedings against BHP Billiton and Vale, joint owners in the Samarco operation in Brazil, following the dam failure. BHP had previously estimated costs close to $1bn, however, reports put the government’s lawsuit at closer to $7bn.
- Rio Tinto has announced they will expand output from one of the world's premier bauxite deposits following the approval of the $1.9bn project. Initial output is planned at 22.8m tonnes per year, but can be ramped up to 50m tonnes.
- Scentre Group announced the sale of three shopping centres in New Zealand with combined gross proceeds of NZ$549m.
- Transurban has announced an equity raising to fund their share of the purchase of the Airportlink in Brisbane. The acquisition completes the link in their toll road assets in Queensland and will be funded through debt and equity. Transurban is seeking to raise $1.025bn, with $300m of that used to reduce debt.
- Qantas announced favourable October traffic numbers and received approval from the ACCC to coordinate with American Airlines on trans-pacific routes for a further five years.
Economics
- The RBA chose to leave the cash rate unchanged, with only very minor changes to their statement from the last meeting. They did separate their comments on the mining versus non-mining sectors of the economy. Effectively, the RBA awaits the US central bank's rate decision to see what effect that will have on the Australian dollar.
- Australian private credit growth came in ahead of expectations in October, assisted by the rise in business credit and the rotation within housing credit, which saw strong growth in owner-occupier lending and declining growth in investor lending.
- Australian September quarter capital expenditure declined over 9% in the third quarter, a lot worse than forecasts, and brings the annual figure close to a decline of 20%. Machinery and equipment was down 8.2%, significant as it feeds into economic growth. Forward looking investment intentions were also weak.
- Manufacturing activity in Australia has rebounded strongly in November with the sector expanding for the fifth straight month, the longest unbroken run of expansion in five years. The more positive conditions are largely due to the lower Australian dollar and strong demand from residential construction.
- US private sector employment picked up in November as businesses added 217,000 jobs, the most in five months. Productivity was revised upwards even as labour costs begin to increase. A US rate rise is on the way.
Politics
- Australia will have more scope to buy international carbon permits to help meet its 2030 reduction targets after Malcolm Turnbull used his speech at the opening of critical United Nations climate talks in Paris to say he will join a handful of developing nations to ratify the second phase of the Kyoto agreement. Ratifying the second commitment period of the Kyoto Protocol, which runs to 2020 will not hold Australia to more stringent carbon reduction targets.
- The IMF decided to add the Chinese currency, the Renminbi, to the special drawing rights basket (SDR). Whilst this doesn't mean reserve currency status just yet, it does mean that central banks from around the world will be somewhat forced to buy the Renminbi as a fail-safe access to IMF funding. The currency was added at a lower weight, 10%, versus 43% for the USD and 31% for the EURO.
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