10 Apr 2015
Markets
- The Australian share market finished up for the week after a small blip on Tuesday following the RBA’s decision to leave rates on hold. Markets had been expecting another rate cut.
- Globally, share markets pushed higher, with European shares hitting eight year highs off the back of M&A activity with FedEx bidding $4.8bn for TNT and Royal Dutch Shell bidding $70bn for BP. Large companies take advantage of the very cheap finance being thrown at them by bankers.
- In local stocks news, junior iron ore miner Atlas Iron has asked to be suspended from trading as it undertakes a full review of its finances and considers asset sales in light of the declining iron ore price. We expect more junior iron ore miners to follow.
- ANZ has successfully overturned a court judgment which would have forced the bank to repay customers millions of dollars in late credit card fees. Customers had wanted to broaden their win to include other fees.
- The AUD pushed higher against the USD this week given the RBA’s decision and the pushing out of expectations of the first US rate rise to September.
- The oil price fell as the US edged closer to deal with Iran, which would likely result in economic sanctions being lifted and the re-opening of Iran’s oil exporting capacity. Saudi production also rose to a record in March.
- The iron price plunge continued over the long weekend with the commodity hitting a new low of US$46.70 a tonne before recovering a little over the course of the week. This marks a 24% decrease in the price of iron ore since the beginning of March. BHP and RIO continue to supply the market given their low cost advantage, whilst the Chinese government has just announced a near 40% tax cut on royalties from domestic iron ore production.
Economics
- The RBA left rates unchanged wanting to see more evidence of the effects of the February rate cut. One more rate cut is now likely before the end of the financial year before the RBA pauses again.
- Australian job advertisements fell for the first time in nine months in March driven by a decline in both newspaper and online listings. However, job ads remained 6.6% higher on the same time last year.
- Worries about household finances and job security have driven consumer confidence to its lowest level in almost eight months. In contrast, retail spending for the first two months of 2015 surged to its strongest level in five months, though off a very low base.
- US employment data disappointed with the economy adding only 126,000 jobs in March, well below the 250,000 expected. The previous two months’ figures were also revised lower. The unemployment rate was unchanged. A June rate rise is now off the agenda, with September now more likely.
Politics
- The Greek Finance Minister has said that Greece intends to meet all obligations to all its creditors ‘ad infinitum’, seeking to quell default fears of a big loan payment Athens owes the IMF this week. The next meeting of Euro finance ministers will take place on April 24.
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