29 Jan 2016
Markets
- Equity markets globally largely finished higher, buoyed by rhetoric from the European and Japanese central banks that they remain ready to do whatever is necessary to stimulate growth and inflation.
- Markets were also buoyed by a strong rally in oil prices as investors realised the commodity had been oversold, and on reports that Russia and OPEC were willing to consider some ‘coordination’ in terms of production cuts to arrest supply concerns.
- In local stock news, ResMed reported a solid second quarter net profit after tax result, up 3% on the previous corresponding period.
- Medibank Private materially updated their guidance for this financial year on the back of margin improvement due to better claims control and the public battle in rejigging hospital contracts.
- The Qube Holdings’ consortium has submitted a binding proposal to acquire Asciano, saying it represents superior value to the rival bid from Brookfield. Qube is offering $6.97 per share in cash and one Qube share for every Asciano share held, which values their offer at $9.17. The ball is now in Brookfield’s court to come back with a higher offer or remove their offer.
- Australian bank stock valuations are now at their widest relative to industrial stocks in 25 years. The valuation dispersion amongst the big four banks is at its widest level ever.
Economics
- Australian business sentiment has held up reasonably well given increased financial market uncertainty and falling commodity prices.
- Australian inflation increased faster than expected in the December quarter despite the sharp falls in petrol prices. The annualised rate has now risen to 1.7%, sitting below the RBA’s target band (2-3%).
- US existing home sales rose by a stronger than expected amount after November’s rather unusually large drop. The November result was put down to new disclosure rules. Housing starts and building permits were also up strongly in December.
- Some concerns arose regarding Italian banks after the European Central Bank’s move to review non-performing loans at several banks. Capital raises may be required.
Politics
- Reports arose indicating that the Chinese Central Bank has taken additional measures to help stem capital outflows.
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