13 Mar 2015
Markets
- Speculation of US interest rate rise sooner than expected, off the back of strong employment data, spooked markets this week with investors taking profits.
- European shares pushed higher as the European Central Bank began its bond buying program (QE) and the EURO continued to fall. However, talks over Greece’s reform program appeared to stall.
- Asian markets were lower as a result of poor Chinese economic data.
- In local stock news, Computershare has rallied to an all-time high as investors pile into the company on hopes of a continued successful expansion, despite the company flagging stagnant revenue growth this year. The market is rewarding them due to their significant US dollar revenues and the potential to earn much higher investment income when US rates rise.
- Ardent Leisure has been thumped by investors after the entertainment group replaced its CEO. Well regarded current CEO Greg Shaw announced his retirement after close to 13 years in the role, to be succeeded by former magazine editor Deborah Thomas.
- Internet provider iiNet is set to be acquired by rival TPG in a $1.4bn deal that has been recommended by iiNet’s board of directors. The offer price is a 33% premium to the company’s five day average stock price.
- The Australian dollar fell to mid-70s this week hitting fresh six year lows due to a strongly rising US dollar. Commodity prices also fell as a result of the rising the US dollar.
Economics
- The Reserve Bank’s record low interest rate cut in February failed to rally business confidence as political uncertainty continues to effect business intentions to invest. Another rate cut is now firming for May, potentially followed by one more in the second half if employment data worsens.
- The latest monthly employment report showed that 15,600 jobs were added with the unemployment rate falling to 6.3%. 10,300 full time jobs were created with 5,300 part-time.
- The US economy added 295,000 jobs in February, well above economist expectations. The unemployment rate fell to 5.5% from 5.7%. The figures aroused expectations the Fed would raise rates even sooner.
- Job openings in the US rose 2.4% in January to 5 million, a 14 year high. Businesses are ramping up their hiring intentions.
- China’s consumer inflation jumped to 1.4% in February, rebounding from a more than five year low. However, the producer price index, the measure of costs for goods at the factory gate, fell much further than expected.
- Chinese retail sales were up 10.7% on a year ago whilst production was also up 6.8%. However, both results were well below forecasts.
Politics
- Disappointingly, Treasurer Joe Hockey called for a public debate on making superannuation more ‘flexible’ during people’s lives, such as for buying property. PM Abbott supported the idea. Policy should be focused on improving infrastructure, especially travel times, to encourage property purchases further away from the city and leave superannuation to fund retirement.
- Senator Glen Lazarus has denied he resigned from the Palmer Unity Party because his wife was sacked. His wife was employed by the party until yesterday when her employment was terminated. Senator Lazarus resigned just hours later, leaving the party but remaining in the Senate as an independent.
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