Trade war fears dissipate as Syria/Russia take centre-stage

Equity markets rose this week as trade war fears dissipated following a key speech from China’s leader.
In local stock news, Scentre Group’s (Westfield Australia) management reaffirmed its guidance of 4% earnings growth and 2% distribution growth. Management is purposely growing distributions at a lower rate in order to retain earnings for the company’s development pipeline. Management also announced a buy-back program of up to $700m.
Telstra has warned NBN Co that it will need to cut its wholesale prices even further for retail telecommunication providers to make any money from selling services over the NBN. The company maintained that providing an NBN service is currently uneconomic for the industry.
AGL Energy remains under pressure from the Prime Minister and the Energy Minister not close a key coal-fired power station in 2022. AGL are looking to replace the station with clean energy, which may result in household electricity bills spiking by another $400 per annum.

A key Australian business survey showed business conditions and business confidence declines in March, but both remain well above historical averages.
Australian consumer sentiment declined in April, but Australians remain slightly optimistic, according to key Westpac index. Consumers were more concerned about their finances than a year ago and were downbeat on spending on big ticket items.
The US created 103,000 jobs in March, falling well short of consensus expectations for 190,000 additions. The unemployment rate held steady at 4.1% whilst annualised wage growth increased to 2.7% in March.
The US central bank president said that the bank will likely need to keep hiking rates to keep inflation under control. However, he also emphasised that he favours a patient approach and that wages growth currently isn’t high enough to push inflation markedly higher.
A key non-voting member at the US central bank believes that US rates are already close to neutral levels and highlighted concerns that his colleagues may become overzealous in raising rates too aggressively, thus killing off US growth.
US manufacturing producer prices rose at the fastest pace since August 2014. Rising input prices are inflationary, but generally bad for economic growth.
Chinese inflation slowed to 2.1% in March, coming in well under economists’ forecasts.

Politics

China’s leader has said they’re actively looking to cut import tariffs on a range of goods and will look to widen market access for foreign investors.
President Trump warned Russia of imminent military action in Syria, declaring missiles will be coming, following the apparent gas attack by the Syrians on their own people. Following his tweet, satellite pictures circulated showing Russian war ships leaving a key Syrian port, possibly heeding Trump’s warning.
The US government has sanctioned several Russian oligarchs, officials, businesses, agencies, and also froze assets from these entities that were under US jurisdiction. Importantly, the sanctions prohibit US citizens or entities from doing business with the sanctioned Russian entities.