25 Jan 2018
U.S government shutdown fails to slow equity markets
Markets
- US stocks pushed higher this week on positive 4th quarter company reporting season thus far.
- Hong Kong stocks broke through new records on strong flows of money from the mainland.
- Chinese stocks also pushed through a 2 year high.
- Local stocks were supported by US and Asian markets pushing higher, whilst European equity markets took a breather.
- In local stock news, McGrath shares fell sharply following the CEO and the entire board resigning, with the exception of founder John McGrath. This coincided with the company issuing another profit warning. Rumours now swirling that the company may be taken private.
- QBE shares rose, even though the company issued a downgrade to expectations, as the market expected the new CEO to take more drastic measures than he did. The market also liked the new CEOs message that his main aim is to simplify the business.
- ResMed shares jumped after the company lifted 2nd quarter sales revenue by 13%, with strong contribution from across the globe. Mask and device sales have been strong, whilst their cloud-based software division continues to grow rapidly.
- The oil price pushed higher on news that dwindling US stockpiles are contributing to a tightening global market. This was in addition to Russian and Saudi oil chiefs indicating their support for a continuation of the production agreement between OPEC and non-OPEC members.
Economics
- A key US consumer sentiment index fell in January, coming in well shy of consensus expectations and the lowest reading since July last year.
- British retail sales had their weakest year since 2013 as consumers squeezed by high inflation continued to keep a tight lid on spending.
- The Bank of Japan pledged to maintain its very accommodative and highly stimulatory policies, whilst noting they were somewhat pleased with inflation expectations moving sideways instead of falling.
- The International Monetary Fund has revised up its forecast for world economic growth in 2018 and 2019, saying that US tax cuts were expected to boost investment in the US which would help its main trading partners.
Politics
- The US government partially shut down for the first time since 2013 after a bill failed to garner enough votes to clear the Senate, following disagreement over immigration and spending. An agreement was finally reached, which will keep the government funded until 8th February.
- The US Commerce Secretary Wilbur Ross (a Trump appointee) hinted at action against China in a trade war. Speaking at the World Economic Forum, Ross used the platform to announce that US trade authorities were investigating China’s infringements of intellectual property.
