14 Oct 2016
Markets dislike Chinese trade data
Markets
- Equity markets fell globally following initial reports that China’s exports fell 10% in September, whilst imports unexpectedly shrank.
- US stocks pushed lower as US 3rd quarter earnings results got off to a poor start and the probability of December rate hike rose.
- The Australian government has issued its first ever 30 year bond, raising a record $7.6bn at a yield of 3.27%. They received more than $13bn in orders for the bonds.
- In local stock news, Tabcorp Holdings noted the announcement made by the NSW Government that NSW greyhound racing will be given the opportunity (a last chance) to continue beyond July 2017. NSW greyhound racing only represents around 5% of the company’s total wagering turnover.
- CSL announced a solid net profit after tax result for the year ended 30 June. The company’s revenues reached over US$6bn. The company also completed a $1bn share buy-back during the year.
- Slater and Gordon shareholders will be represented in a $250m-plus class action against the law firm for wrongdoing in relation to being too slow in their release of information about its finances. Rival law firm Maurice Blackburn is filing the class action.
- The UK Pound continued its volatile ride as markets attempt to digest whether their exit from the EU will be orderly or unorderly. European leaders appear to be getting tougher in their rhetoric towards negotiations with Britain, hardly surprising given upcoming elections.
- Demand for Australian coking coal has spiked, with contract prices set at US$200 per tonne for the next quarter with Japanese still mills. The price is a 117% increase on the March quarter price.
Economic
- According to key data, Sydney house prices are up 14% this year through to September, compared with 9% across the nation’s major cities. Prices in Sydney have now almost doubled since the end of 2008.
- The NAB monthly business survey showed solid levels of activity in the non-mining economy, but the level of activity wasn’t wide spread across all industry sectors.
- August housing finance approvals fell, driven by falls in owner-occupier approvals, while investor approvals ticked slightly higher.
- Australian consumer confidence continued to rise in October supporting other evidence that consumption growth will remain healthy over the months ahead.
- Minutes released of the US central bank’s September meeting showed that the decision not to hike rates was a close call. Those that agreed with the Chair not to hike stated clear intentions to raise rates sooner rather than later.
- A key US jobs report came in below expectations, but it wasn’t enough to reduce the likelihood that the US central bank raises rates at its December meeting. August private payroll numbers were also revised higher.
- Importantly, US average hourly earnings continued to rise in September, with the year on year increase now 2.6%. Solid number, but not enough on its own to compel the central bank to raise rates.
Politics
- Democratic US presidential nominee Hillary Clinton appears to have also won the 2nd presidential debate against Donald Trump. More tapes and audio have surfaced regarding Trump’s previous comments on women. Key Republicans are starting to withdraw their support of their candidate as recent polling shows a strong chance the Democrats may gain control of the Senate.
- The US navy fired at two targets in Yemen following targeted attacks by Houthi rebels on US vessels, which saw one missile splash into the water and a narrow miss from the other due to evasive action taken by the US boats. The fighting in Yemen pits the Saudis against the Iranians.
