15 Jan 2016
Markets
- Markets had a twitchy week with lower falls on the Chinese market and big daily trading ranges on the US market.
- The Chinese authorities removed the “circuit breakers” they had in place (given they didn’t work) in favour of other measures.
- Surprisingly, the US share market fell on the announcement of a bumper US jobs figure. Markets instead focused on very little growth in wages and on the potential flow-on effects to emerging markets resulting from upward pressure on the US dollar.
- In local stock news, Origin Energy announced that their first shipment from the $25bn Australian Pacific LNG joint venture had left for Asia.
- CIMIC (previously Leighton Holdings) launched a takeover bid for listed mineral processing and infrastructure services group Sedgman. The bid values the target at $243m. CIMIC currently holds a 37% stake in Sedgman.
- Wesfarmers announced it has made a conditional offer to acquire a string of home improvement stores in the UK called Homebuild, which will leverage of the success of Bunnings in Australia. If successful, the acquisition will cost $700m, with the 165 stores being rebranded Bunnings over time.
- The Australian dollar continued to fall, hitting 69c against the US dollar, on concerns regarding China and falling commodity prices.
- Oil prices continued to fall as the market remains concerned about weaker Chinese demand and higher global supplies. The expectation of further rises in the US dollar also didn’t help.
Economics
- Australian building approvals plunged in November as construction activity cools in the housing sector. Approvals for the construction of new homes fell 12.7% in the month, more than the 3% decline expected.
- Australian construction activity fell in December, after four months of expansion, due to weakness in the mining-related engineering sector as well as commercial construction. A key construction index fell into contraction territory as a result.
- The number of Australian jobs advertised in 2015 rose by a strong 10%.
- The number of Australian job vacancies is rising, hitting numbers not seen in three years. There are now nearly 12% more vacancies than one year ago.
- The US economy recorded the addition of nearly 300,000 jobs in December, an unbelievable number, pushing the economy to near full employment. October and November jobs numbers were also revised upwards.
- Chinese inflation rose only slightly, remaining at low enough levels to allow the central bank to ease rates further.
- China’s exports rose 2.3% in December, after a drop in November. Imports fell 4%. In US dollar terms, exports fell just 1.4% against forecasts of an 8% drop.
Politics
- A terrorist attack was foiled in the Indonesian capital Jakarta with two reported deaths. This followed attacks in Turkey, Iraq and Cameroon.
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