4 Mar 2016
Markets
- Stock markets globally finished higher this week on realisations that the world isn’t coming to an end.
- The US market rallied to a seven week high after manufacturing showed signs of stabilising and as fourth quarter economic growth was revised higher.
- Chinese stimulus measures also boosted markets across the Asian region and in Europe, with further stimulus expected in the coming weeks.
- In local stock news, Qantas said capacity on its international routes rose by 10% in January versus the same period in 2015. The increase was due to strong inbound demand and steady outbound demand on routes including Asia and the US.
- BHP announced that an agreement had been reached with the Brazilian government regarding the dam failure last year. The agreement is favourable to BHP, with compensation much lower than originally expected, payments staggered over six years, and with costs to be first borne by the local JV business (50/50 BHP Vale).
- Harvey Norman announced a strong increase in net profit for the half year and also lifted their dividend. Net profit was up 31%, with sales and revenue up circa 7% – a strong result considering the falls in the Australian dollar and lacklustre retail spending.
- Ramsay Healthcare announced half year results with net profit after tax up 16% and earnings per share up nearly 17%. Revenue was up a strong 25%.
- Commodity prices largely pushed higher this week on positive US data and new stimulus measures from the Chinese. Iron ore pushed above US$51 per tonne.
- Somewhat surprisingly, the Australian dollar moved higher against the US dollar this week buoyed by stronger than expected economic growth and rising commodity prices.
Economics
- The Reserve Bank of Australia held the cash rate steady at 2%, continuing to show themselves as reluctant rate cutters. The decision was expected.
- The Australian economy expanded at a faster than expected rate in the December quarter, pushing growth for 2015 up to 3%. Not bad considering the slowdown in the mining sector and slower global growth.
- Australian private sector credit growth grew at 6.5% in 2015, rising at a faster pace than the year earlier.
- US fourth quarter economic growth was revised upwards with the economy growing faster than expected at 1% versus 0.7% originally reported. US rate rises are firmly back on the table.
- The US private sector added an incredible 214,000 jobs in February, continuing the impressive run of new jobs. The number was well ahead of market expectations.
- US core inflation (ex-volatile items) showed a continued upward trend. Consumer spending in January rose the most since May 2015 and incomes rose at the same rate.
- US investor sentiment was bolstered by a key report which showed manufacturers had shrunk their business at a slower pace in February.
- China’s central bank announced new measures designed to boost growth, cutting their reserve requirement for banks and guiding the currency lower.
Politics
- US presidential hopefuls Donald Trump and Hillary Clinton both firmed their respective leads in US voting on “Super Tuesday”, a day where the greatest number of US states hold primary elections. All the focus was on Trump, however, Clinton pulled well ahead of her Democrat competitor Bernie Sanders.
- Australian private health insurance premiums will rise more than 5% next month, adding more than $200 to the average family cover and allowing insurers to pocket an extra $1bn in revenue. The increase confirmed by the health minister marks the ninth consistent annual increase of more than 5%.
If you would like to meet with your Financial Adviser, please call us on (02) 9324 8888 or click here.
