19 Feb 2016
Markets
- Share markets globally rallied this week as investors finally discovered some rationality.
- European markets continued to rise as they awaited further stimulus from the European Central Bank (ECB). Rumours are circling that the ECB may be ready to buy Italian bad loans.
- More than three quarters of large US companies have reported sales that beat analyst expectations.
- ANZ has announced cash earnings of $1.85bn in the first quarter, with a much lower impairment charge on their Asian exposures than the market expected. There was no flagging of a potential dividend cut.
- CBA announced the issue of a new hybrid security in order to raise to $1.25bn to meet strict new capital requirements.
- NAB provided a first quarter trading update, with cash earnings up 8% to $1.7bn for the December quarter. Revenue was up, whilst charges for bad and doubtful debts fell.
- Woodside Petroleum reported $1.1bn in writedowns, with underlying profit coming in at US$1.126bn. However, revenues slumped 32% on lower oil prices.
- Sydney Airports reported a strong full year result, with revenue and earnings up over 5% each, and a rise in the dividend. Though, capital expenditure numbers were much higher than the market expected. Passenger growth was strong at 7.5%.
- Telstra’s half year profit rose slightly, with the company flagging a big rise in operating expenses. Cost cutting is on the way. Revenues were up a solid 9%.
- Origin Energy reported a solid result for the half year with net profit after tax coming in well above market estimates. They announced that future dividends will be suspended until their debt levels are lower. Origin has $6.8bn of undrawn debt facilities and cash, and expects to spend an additional $1bn on their major LNG project.
- A closed door meeting between key OPEC members saw the Saudis, Russians, Qataris and Venezuelans agreeing to the potential freezing of production at current levels. The market wanted production cuts, not a freeze in production.
Economics
- Australia’s unemployment rate jumped to 6%, surprisingly moving against the positive momentum of recent months. 7,900 jobs were lost in January, with the number of unemployed rising by 30,200.
- The number of Australian housing finance approvals rose in December, led by refinancing activities, which have picked up significantly more recently. Approvals for established dwellings decelerated sharply, and the value of investor approvals remains weak with the annual rate decelerating to the lowest level since March 2009.
- The US central bank’s January meeting minutes confirmed the majority of members showed concern about stock market weakness and advised the central bank to hold off on further rate rises. When will they learn…
- US industrial production rose in January, the first increase since July 2015, and well above expectations. Manufacturing also rose.
- US retail sales were up in January from December levels. December’s sales were also revised upward. Auto and internet sales provided the boost.
- Japanese fourth quarter economic growth contracted with weak private consumption the main factor.
Politics
- China’s central bank governor has played down concerns over the country’s decline in foreign exchange reserves, saying those concerned need to differentiate between capital outflows and capital flight.
- PM Malcolm Turnbull has confirmed that a rise in the GST will not be in the policy mix he will take to the election later this year. Disappointing, given there will be no tax reform without a GST increase. Fair to say he needs more time to sell a GST increase to the people.
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