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Equity investors dislike Fed minutes

Markets

  • Local and global equity markets were flat to weak this week as investors read-through of the Fed minutes increased concerns of no rate relief this year. 

  • In local stock news, Anglo American agreed to enter talks with BHP Group after rejecting a third buyout proposal worth about $74 billion. The latest bid from BHP, which they’ve called their final, requires Anglo to spin off majority stakes in South African platinum and iron ore companies. 

  • James Hardie Industries shares fell sharply to a six-month low after the building materials company announced fourth-quarter earnings of US$232.5 million, coming in below expectations. The company also forecast lower sales in the next financial year.

  • Telstra shares fell whilst the company announced plans to cut 2,800 jobs as part of cost-cutting measures to its enterprise business division aimed at addressing some structural issues. 

  • Bendigo Bank shares rose strongly following a strong trading update for the regional bank, which came in ahead of expectations. Cash earnings for the first ten months were $464 million, circa 10% above consensus whilst their net interest margin also came in above expectations. 

  • Star Entertainment Group shares surged after the under-siege casino operator confirmed it had received multiple tentative takeover offers

  • Michaell Hill International shares sank to a more than three-year low after the jewellery chain said sales for its core brand were still negative relative to last year. 

  • Coal miner New Hope Corp rallied on a strong third quarter production update which came in better than expected. Production was up 21% in the quarter whilst costs tracked lower. 

  • Car dealer AP Eagers Automotive shares fell sharply on a downgrade to earnings at their AGM saying consumers were feeling the pressure. The company expects profit before tax to fall 15% in the half. 

  • The Aussie dollar weakened slightly on US dollar strength as the US Fed minutes took a hawkish tone on rates. 


Economic


  • The RBA board minutes confirmed that both a rate hike and no change were discussed, with the board reluctant to “fine tune” policy. The comments appear to indicate that the hurdle for a further rate hike is quite high. 

  • The Westpac Consumer Confidence Index showed that sentiment dipped further last month, with renewed cost-of-living pressures and inflation concerns offsetting a reasonably well-received federal budget. The sentiment reading remains deeply pessimistic. 

  • US existing home sales fell 1.9% in April to a 4.14 million annualised rate, coming in below expectations. New home sales slid 4.7% to a 634,000 annualised rate, coming in below expectations. 

  • A key US data point which measures activity in the manufacturing and services sectors rose in May to its highest level in more than two years

  • A final reading of Eurozone inflation confirmed a previous report that showed prices increased 2.4% on an annual basis in April, in line with expectations. The European central bank president said she is confident that inflation is under control. 

  • UK inflation eased less than expected, dashing hopes of a June interest rate cut by the Bank of England. Prices rose 2.3% in April, slowing from a 3.2% increase in March. 

  • The Reserve Bank of NZ left interest rates unchanged at 5.5% but unexpectedly said that it had considered a rate hike whilst pushing back on the timing of rate cuts from the second to the third quarter of next year. Good lesson for the RBA on talking tough. 


Politics

  • Chinese officials eased mortgage rules and urged local governments to buy excess housing to revive the ongoing property crisis as it continues to drag on the country’s economic growth. 

  • British Prime Minister Rishi Sunak has called for an earlier-than-expected UK general election on July 4 in a major gamble considering his party currently trail the Labour Party in polling. 

  • Both the Iranian President and foreign minister died in a helicopter crash on the way back from visiting the country’s northwest. President Raisi had been seen as a favourite to eventually succeed Supreme Leader Ayatollah Ali Khamenei. 

  • Australia is seeking to expand ties with India by sending business representatives for industries like agrifood, education, technology, energy, and resources, according to Australia’s trade minister. 

  • The defence rested in the first of four felony trials former US President Donald Trump faces, without Trump taking the stand. Closing arguments are set to begin next week. 


Disclaimer: The material and contents provided in this in this email is of a general nature and is not intended to be exhaustive. It is made available in good faith and believed to be correct at the time of preparation. The information does not provide specific advice as the objectives, financial situation, and specific needs of any particular person, including yours, were not taken into account when preparing the information. Prior to making any financial decisions, always seek independent legal and financial advice. Futuro Financial Services Pty Ltd and its authorized representatives (or credit representatives) do not accept liability for any errors or omissions in the information provided in this document. Peer Wealth FP Pty Ltd is a Corporate Authorised Representative (Representative No, 001281977) ABN 24 115 294 463 of Futuro Financial Services Pty Ltd, Australian Financial Services Licensee (AFSL 238478).


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