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Equity markets globally pushed higher this week, buoyed by positive US economic data and US company reporting, a positive Japanese election result, and the Bank of England ready and willing to launch fresh stimulus next month.
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A sleuth of US companies reported very solid 2nd quarter results, bucking expectations for anaemic to falling earnings and revenue numbers.
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In local stock news, CIMIC Group subsidiary Leighton Contractors announced that in JV with a Hong Kong firm, it had been awarded an $1.58bn contract by the government of Hong Kong for the construction of a tunnel. The project is expected to generate revenue of $805m.
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Iron ore stocks rallied on reports from the Pilbara Ports Authority that exports from Port Hedland increased by 9% on the same time last year and were up 4% on May’s numbers.
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The Aussie dollar pushed higher this week, putting greater pressure on the RBA to cut rates sooner rather than later. The upward pressure was the result of relatively robust employment numbers and continued market expectations regarding no further US rate rises this year.
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Australia added 7,900 jobs in June, below expectations, but importantly the majority of the new jobs were in full time employment. This bucks the recent trend of falling full-time positions. The unemployment rate ticked a little higher as a result of more people working or looking for work.
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Housing finance rose in May as loans to investors picked up 3.9%, their biggest monthly gain in a year. Investment finance also picked up, the first increase in 3 months. However, the slowdown in housing investment loans continued.
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Data has shown that property rents fell over the past year as slowing population growth meets a rapid increase in housing supply. However, significant rental declines were only seen in Darwin and Perth, with Sydney and Melbourne rents pushing higher.
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Businesses shrugged off post BREXIT market volatility to report some of the best business conditions since the global financial crisis. However, the survey was completed pre the Federal Election result, which will most likely result in a reversal in the data next month.
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US jobs data showed a solid bounce in June with an increase in jobs of 287,000, dispelling fears of US slowdown following May’s poor numbers. However, wages growth rose by less than expected.
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US unemployment rose to 4.9% as the number of people working or actively seeking work increased.
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The central bank of England surprised everyone by leaving its key interest rate unchanged at 0.50%. Many had expected them to cut rates following the BREXIT. They indicated they wanted to wait before easing further to get a clearer picture on the short term impact of BREXIT.
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The International Monetary Fund cut its growth outlook for the Eurozone due to BREXIT, with expectations of economic growth next year revised down to 1.4% from 1.7%.
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China’s foreign exchange reserves rose in June, potentially showing that the central bank of China has cut back its currency intervention activities.
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Consumer inflation in China decelerated in June as food prices increased at a slower pace, giving the central bank more leeway to ease monetary policy if needed.
