6 Mar 2015
Markets
- The US market broke through record highs this week when the Nasdaq (the technology heavy stock exchange) rose to 15 year highs, the third time ever it has closed above 5000 points.
- Australian and European shares followed suit both hitting new seven year highs.
- Chinese shares fell as worries about a slowing economy trumped enthusiasm for the central bank’s latest interest rate cut.
- In local stock news, Rio Tinto announced it is streamlining its product groups and corporate functions as part of the continued focus on efficiency and costs. The company’s world class portfolio of assets will be condensed into four groups: aluminium, copper and coal, diamonds and minerals, and iron ore. Cost cutting continues.
- Orica plans to complete a $400m share buy-back over the next year after finalising the sale of its chemical business to become a purely mining services company. The buy-back is a result of the company’s excess cash and management’s belief that the shares are undervalued by the market.
- Macquarie Group has announced the acquisition of an aircraft operating lease portfolio and will raise $500m via an institutional placement. The purchase price for the 90 aircrafts is $5.1bn.
- Myer Holdings announced that Bernie Brookes is stepping down from his position as CEO and MD Richard Umbers has been appointed as his replacement. Myer also lost their CFO. Tough times for the retail sector continue, especially for those retailers that aren’t well positioned.
- Oil prices rose after Saudi Arabia raised the official prices for its oil in the US and Asia, suggesting robust demand from refiners.
Economics
- The Reserve Bank of Australia chose to leave interest rates steady this week seeking more time to assess the effect of the rate cut in February. Though, the language in their statement clearly indicates that another rate cut is on the cards over the next couple of months.
- The Australian economy grew at 0.5% in the December quarter, which was below expectations. The result is a slight increase on the September quarter number, bringing the annual figure to just 2.5% and slowing fast. Our long term average is 3.25%.
- The number of homes approved to be built has surged in January to a new record high, amid a strong increase in volatile apartment approvals. The result baffled economists who were predicting a fall in approvals during the month.
- US economic news was weaker following the lowering of fourth quarter economic growth numbers, the biggest fall on record for a key manufacturing index, and a drop in pending home sales. Consumer sentiment also fell.
- The European Central Bank (ECB) announced it will begin its $1.22 trillion bond buying program on 9 March. The ECB also left official interest rates unchanged at 0.05% and announced it expects the Eurozone economy to grow faster than previously expected thanks to its aggressive easing program, lower oil prices and a weaker EURO.
- China cut official interest rates by 0.25% in a move aimed at further stimulating their slowing economy.
Politics
- Treasurer Joe Hockey has ordered that a Hong Kong-owned business sell a Sydney mansion which was purchased in breach of foreign investment rules. The $39m property at Point Piper was bought last year by an Australian company which is owned by a Hong Kong based property group. The group now has 90 days to sell the property.
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