25 May 2018
Trump cancels North Korea summit
Markets
- Both local and global equity markets fell this week as concerns arose regarding geo-political risks.
- In local stock news, CSL upgraded its profit guidance for this year, benefiting from a shift to higher margin products and operational performance in its flu vaccine business.
- AGL reaffirmed its decision to close its Liddell Power Station in 2022 by spurning Alinta Energy’s offer. AGL’s stance remains wind and solar are already cheaper to produce electricity than coal and will be cheaper to supply as battery technology advances.
- Telstra shares came under further pressure as the company suffered its second widespread network outage in a month.
- Santos turned away private equity suitor Harbour Energy after the company lobbed a higher offer of close to $7 a share. Habour have made it clear this was their final offer after already being spurned by Santos previously. Pressure is now on Santos board and management to prove they were right.
- James Hardie shares rose after the company reported a 17% increase in its full year operating profit and lifted its final dividend. The result was assisted by a favourable tax rate, and better than expected earnings growth from both their North American and International fibre cement divisions.
- The oil price fell this week even in light of potential further disruptions to supply. Markets concerned about demand and potential future supply from US shale.
Economics
- Minutes from the US central bank’s latest meeting suggested higher inflation may not result in faster interest rate hikes. Whilst members thought another rate hike soon would be warranted, many saw little evidence of general overheating in the labour market.
Politics
- Chinese authorities denied accounts by some US officials that it had offered a package to slash the US trade deficit by up to $200 billion, but said the consultations were constructive.
- The US Treasury Secretary said that the US and China had agreed to drop their tariff threats. In contrast, President Trump said he wasn’t pleased with the recent US-China trade talks and also cancelled the upcoming North Korea summit.
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