29 Mar 2018
Higher volatility here to stay
Markets
- Stock markets mostly finished lower this week as investors tried to digest potential trade wars, US tech stock falls, and rising diplomatic tensions with Russia.
- Volatility in investment markets continues to trend higher. This is likely to continue over the year ahead.
- US tech stocks continued to come under selling pressure this week following last week’s falls led by Facebook.
- Amazon lost as much as US$53bn in market value at one stage after a report that President Trump indicated he wanted to rein in the company.
- In local stock news, toll road operator Transurban has announced plans to acquire a toll road and bridge in Montreal, Canada, for $862m from Macquarie. The toll concession runs to 2042.
- A2Milk shares fell sharply this week following a report global food giant Nestle had launched its own A2 protein-based products. Competition coming thick and fast.
- Rio Tinto has exited coal by agreeing to sell its last remaining coal asset for $2.9bn. The sale is expected to be completed in the 2nd half of 2018 and requires approval from regulators.
- The iron ore price has continued to fall as traders pointed to ongoing trade tensions between the US and China as the cause.
- The oil price received upward support after the Saudi energy minister said OPEC members would need to continue coordinating with Russia and other non-OPEC countries on supply curbs in 2019 to further reduce global oil inventories. The US oil rig count hit a 3 year high.
Economics
- US economic growth increased at annual rate of 2.90% in the 4th quarter of 2017, boosted by the biggest increase in consumer spending in 3 years and higher investment in business inventories.
- US house prices increased 6.4% in the 12 months to January after rising by the same amount in the 12 months to December.
- The German central bank president has urged a faster end to the current stimulus measures while also arguing that the prospect of an interest rate rise in 2019 remains a realistic possibility. The president is also part of the European central bank’s rate setting committee.
Politics
- The Australian Labor party has confirmed it will repeal the Government’s company tax cuts if passed by the Senate this week or some other time before the election. The package will cut the corporate tax rate from 30% to 25% for all companies by 2026-27.
- The White House has clarified that exemptions granted to Australia for steel and aluminium tariffs would only be temporary, pending new negotiations, and that quotas may be imposed on imports of the metals. South Korea felt that wrath this week.
- President Trump signed Congress’ $1.3trn spending bill that would keep the government open until September. Trump threatened Congress that this would be the last one he signs, whilst Congress bit back daring Trump to carry through with his threat come September.
- President Trump has ordered 60 Russian diplomats the US considers spies to leave the country and closed Russia’s consulate in Seattle in response to the nerve-agent attack on a former Russian spy in the UK. European allies, along with Canada and Australia have all followed suit.
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