13 Jan 2017
Trump speaks, market rally slows
Markets
- Equity markets took a much needed breather this week, assisted by concerns regarding both the content and lack of content in President-elect Trump’s press conference.
- In local stock news, Tatts Group has rejected the takeover offer from the Macquarie-led consortium and is retaining its backing for Tabcorp’s bid. The consortium’s bid price had the potential to be higher, but was highly conditional.
- Woolworths announced the sale of its petrol business to BP, which includes 527 fuel convenience sites and 16 development sites, for $1.785bn. Good outcome for Woolworths.
- James Packer has re-joined the board of Crown Resorts and pushed the company’s leader aside after a tough 12 months. John Alexander, another long-time Packer associate, will now run the gambling business, with Packer taking a hands-on approach to all parts of the business now that their overseas business ventures (Macau and Las Vegas) are on the outer.
- Bellamy’s shares slumped again after finally coming out of a very long trading halt. A management reshuffle saw the CEO go, whilst key shareholders continue to push for a spill of the board as well. The company now expects much a lower net profit due to lower sales volumes, high interest costs, and increased costs of ingredients.
- The iron ore price rallied strongly this week, shooting back above US$80 a tonne, as Chinese restocking continues.
Economics
- Australia’s trade balance has returned to surplus for the first time in almost 3 years, thanks to much stronger commodity prices but also a strong uplift in export volumes of coal, iron ore, and rural goods.
- Housing approvals rebounded strongly in November, increasing by 7%, bringing the total in 2016 to 211,000. The strong November result was driven solely by apartment approvals.
- The US added 155,000 jobs in December, taking the total increase for 2016 to 2.2 million.
- The strong jobs increase has pushed wages higher with wages up 2.9% for the year, the fastest increase since the end of the financial crisis.
- A private survey of Chinese manufacturing activity has risen to its highest level in 3 years. Production expanded at the fastest pace in nearly 6 years. The effects of government stimulus.
- Both Eurozone and Chinese inflation came in above market expectations.
Politics
- US President-elect Donald Trump took centre stage this week denouncing “fake news” and falsehoods propagated by social media (and even the mainstream media – he called out CNN) even though some of that actually got him elected in the first place. His news conference largely disappointed, with very little of the post-election-win-speech Trump and more of the wayward-on-the-campaign-trail Trump.
- Trump’s nominees for key government postings were grilled in hearings on Capitol Hill, with those grilled so far largely refusing to confirm the President-elect’s rhetoric and views, and some even going so far as to take a completely different side on some topics. Trump hasn’t appointed these people to agree with him – rather, he’s put forward people with specific expertise and strong opinions who are known for getting things done.
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