Markets
Local and global equity markets broadly trended higher this week with the US technology heavy Nasdaq hitting all-time highs.
In local stock news, Newmont announced it generated US$2.8 billion in cash in the fourth quarter, with the company planning to sell six gold mines which it inherited from its acquisition of Newcrest Mining late last year.
TPG Telecom shares fell as increasing competition and a high debt burden hit home. Revenue was up 2% but below consensus, with softer margins hurting earnings.
Coles shares rose to a six-month high after the supermarket group announced better than expected earnings, with better costs and lower slippage (including theft) plus a good start to the quarter.
Woodside Energy expects liquified natural gas consumption to rise by 50% over the next decade, according to their CEO. The company’s 2023 profit fell 37% on lower energy prices and asset write-downs, with the company reporting good cost management, profit, and a dividend beat.
NextDC shares rose strongly after the company announced its operating earnings rose 5% in the first half. Revenue climbed 31% with earnings coming in ahead of expectations.
Economics
The Australian monthly inflation indicator was steady at 3.4% in January, with elevated housing inflation offset by goods discounting, lower fuel, and a fall in international travel prices.
Australian retail trade rose by a solid 1.1% in January after an upwardly revised but still large contraction of 2.1% in December. Spending is weak with annual growth at just 1.1%, near record covid lows.
Dwelling prices rose by 0.6% across the eight capital cities in February, the thirteenth consecutive monthly gain, with prices rising strongly in Brisbane, Adelaide, and Perth. Dwelling prices are now up 10.7% since their most recent trough in January 2023.
Australian construction work done rose by 0.7% in the December quarter to be 8.7% higher through the year. Building work was 1.1% lower with a big fall in residential construction offsetting a gain in non-residential construction. Engineering construction continues to rise strongly.
The US economy grew at a 3.2% annualised rate in the December quarter coming in slightly below expectations.
The much-anticipated US PCE deflator, one of the central bank’s preferred measures of inflation, came in line with expectations rising by 0.4% in January to be 2.8% higher on a year ago. This was the smallest gain since February 2021.
A number of US central bank officials added to the calls that interest rate cuts will be delayed this year following stronger than expected inflation and labour market data in January.
US new home sales rose by 1.5% in January to a 661,000 annual pace, coming in below expectations, while two key house price indices showed growth but came in below expectations.
A key US manufacturing index rose strongly in February, coming in above expectations, but remaining in contractionary territory.
A key US consumer confidence index fell in February, coming in below expectations, but remaining in expansionary territory.
European central bank president Christine Lagarde said that relatively benign December quarter wage growth data is encouraging, but not yet enough to give the bank confidence that inflation has been defeated.
UK consumer confidence slipped back in February, ending a three-month run of improvements, suggesting households are not ready to splash out despite growing signs the economy has emerged from its shallow recession.
Japan’s core consumer inflation slowed for a third straight month in January but beat forecasts whilst landing at the central bank’s 2% target. Ending negative interest rates is close.
A Bank of Japan board member sent a strong signal that the case for ending their negative interest rate policy is gaining momentum, with the bank poised to make its first rate hike since 2007.
India’s economic growth accelerated in the final three months of 2023, coming in ahead of consensus. GDP rose by 8.4% from a year ago, boosted by strong private sector investment and a pick-up in services spending.
Politics
Denmark said it had dropped its investigation into the explosions in 2022 on the Nord Stream pipelines carrying Russian gas to Germany, becoming the second nation to do so.
Sweden cleared the final hurdle to gaining NATO membership, with the approval by Hungary’s parliament this week coming twenty-one months after Sweden submitted its membership bid.
China’s foreign minister Wang Yi has been invited to Australia for a two-day visit later this month, as reported by Chinese media.
Weekly market updates are written by Chris Lioutas. Chris is on the board of Peer Wealth X Futuro Investment Committee. View LinkedIn
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