Markets
Local and global equity markets saw weakness this week as the US central bank remained hum on rate cuts.
In local stock news, Newmont shares rose strongly after the company reported an increase in first quarter revenue, a beat to expectations, driven in part by record gold prices.
ResMed shares climbed almost 10% during the week with the company announcing a 25% boost to first quarter profits, driven by increased demand for its products and cost improvements.
BHP is considering making an improved offer for Anglo American after its initial offer was rejected by the London-listed miner. A tie-up would be interesting, but the risk is BHP overpays.
TPG Telecom shares rose after the company signed a $1.2 billion 11-year network sharing deal with Optus to expand their regional coverage. The move comes approximately ten months after the competition regulator rejected a similar deal between the company and Telstra.
Coles shares were up as the supermarket giant reported its third quarter sales revenue rose 3.4% in the March quarter compared with a year ago. In contrast, Woolworths had a softer third quarter update coming in below expectations with food sales growth of just 1.1%.
National Australia Bank said it will buy-back up to $1.5 billion of its own stock as profit at the bank met expectations. Cash earnings fell 13% in the six months to the end of March versus the same period last year.
Macquarie Group’s full-year earnings missed analyst estimates as profit from its commodities and global markets business dragged on performance.
The iron ore price continued its recovery with improving demand from China countering higher inventories.
Speculation continued that Japanese authorities intervened in currency markets to support the Yen after it touched its weakest level against the US dollar in 34 years.
Economic
Australian retail trade data declined in March, falling by 0.4%, and coming in well below expectations. The annual growth rate of 0.8% is now the weakest on record, excluding Covid and the introduction of the GST. Clothing & footwear, department stores, and household goods retailing were the weakest components in the month.
Private sector credit in Australia rose by 0.3% in March, coming in weaker than the previous couple of months. Housing credit rose by 0.4%, the seventh consecutive month of rises, to be 4.3% higher through the year. Business credit was 0.5% higher in the month to be up 7% through the year.
Australian home prices rose by 0.6% across the capital cities in April, the same pace as both February and March. Strong gains again from Perth, Adelaide, Brisbane, with a more modest rise in Sydney and falls in Melbourne.
Australian building approvals rose by 1.9% in March but are 7.3% lower through the year. Private sector house approvals rose 3.8% while multi-unit approvals were 3.6% higher in the month.
The US central bank kept rates unchanged at 5.25-5.50% but made an interesting adjustment to their asset buying program (ie. quantitative easing or money printing). Chair Jerome Powell said it would likely take longer than expected for the central bank to have confidence inflation is moving toward its 2% target but didn’t explicitly take rate cuts off the table this year.
Personal income in the US lifted 0.5% in line with expectations whilst personal spending was up by 0.8% in March, a little higher than expected. A key consumer sentiment index fell in April whilst consumer confidence fell rather sharply, well against expectations for a rise.
The US Labor Department’s employment cost index rose by 1.2% in the first quarter from the previous three months and 4.2% from a year earlier.
The keenly watched US ADP private payroll showed jobs increased by 192,000 in April, coming in above expectations, whilst job openings fell in February to a three-year low.
A European central bank governing council member warned that a return to ultra-low interest rates may be required if cuts aren’t made soon.
Annual German consumer prices rose 2.4% in April, compared with 2.3% in March.
The Bank of Japan left its interest rate unchanged following its first rate increase in 17 years in March. Inflation doesn’t yet warrant further rate increases, but the languishing Yen could do with some. The Bank expects inflation to remain above or around its inflation target in the period ahead.
An indicator of China’s factory activity fell in April, implying slower expansion, but the reading remained in expansionary territory.
Politics
Chinese President Xi will travel to the European Union for the first time in five years, with European countries seeking investment from China.
Australia will tighten scrutiny of foreign investment into mining and refining of critical minerals as part of an overhaul of its national regime while speeding up approvals in “low-risk” areas to boost economic growth.
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