Weekly Market & Economic update - Aussie Stock Forums

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  1. #1

    Default Weekly Market & Economic update

    Thought this might be of interest.

    Attached is our weekly economic and market report which looks at the key events of the last week and the outlook.
    While global economic news over the last week has generally been positive, Australian economic data has been somewhat mixed with weak data for retail sales and building approvals.
    In the US, while a private sector jobs survey disappointed market expectations, the combination of the hiring of Census workers, a rebound after bad weather in February and other surveys pointing to rising underlying employment growth suggest that payrolls will have increased in March, although maybe by not as much as some might be forecasting. Moreover, if history is any guide the big surge in company profits over the last year points to strengthening US employment ahead.
    Australia looks set to get a massive boost to national income from higher iron ore and coal prices. BHP and Rio are looking like getting a near doubling in iron ore prices under new quarterly price contracts. If sustained this would provide a $25bn boost to the value of annual iron ore exports. This will be further boosted by higher coal prices which could provide an additional $15bn or so boost to national income. Together this is equivalent to about 3% of GDP. The associated tax revenue would likely add to the case that the Budget will be back in surplus well ahead of the current projection for 2015-16, probably by 2012. And while Australia's trade deficit worsened to $1.9bn in February on the back of lower gold and coal exports a circa $3.3bn a month boost to iron ore and coal export earnings on the back of higher prices indicates that we are likely to see a return to trade surpluses some time from April.
    In Australia in the week ahead, the focus will be on the Reserve Bankís interest rate decision on Tuesday. Our assessment is that the RBA should hold fire. Recent data for housing finance, retail sales and building approvals have all been soft and anecdotal evidence suggests that all the talk about rate hikes is having a dampening impact on the economy and so with inflation expected to remain under control we think the RBA can afford to wait another month or so before moving again. However, what I think the RBA should do and what it will do are not necessarily the same, and in terms of the latter the barrage of up-beat commentary from the RBA and the Governorís unprecedented appearance on TV to warn home borrowers against borrowing too much and that interest rates are likely to increase further, coming on the top of a strengthening labour market, strong house price gains and a likely big boost to national income from iron ore price increases suggests that the Bank will raise rates by another 0.25% on Tuesday. But itís a pretty close call.
    Australian data for job ads and employment data for March will also be released with the labour force report likely to show a 7,000 gain in employment and unemployment remaining around 5.3%.

    Shane Oliver
    Head of Investment Strategy and Chief Economist
    AMP Capital Investors
    Attached Files

  2. #2
    Can be found on the bid Trembling Hand's Avatar
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    Jun 2007

    Default Re: Weekly Market & Economic update

    Quote Originally Posted by shady View Post
    Shane Oliver

    He hasn't many friends around here.

    For good reason.
    Who is the happier man, he who has braved the storm of life and lived or he who has stayed securely on shore and merely existed? -Hunter S. Thompson

  3. #3

    Default Re: Weekly Market & Economic update

    I have a question....

    This was from the Australian today..

    This is the bit I'm interested in..

    "Higher prices were most evident in alcohol, cigarettes and petrol, offset by cheaper fruit, vegetables, travel and bread."

    Now are they saying that these items (alcohol,fuel & smokes) are contributing to rising inflation?

    Isn't it the government that puts taxes up twice a year on alcohol and cigarettes MAKING them more expensive?

    Secondly, how will raising interest rates change the price of these goods?
    Its not like people will stop spending on bread and petrol.

    I'm confused

  4. #4

    Default Re: Weekly Market & Economic update

    Quote Originally Posted by Trembling Hand View Post

    He hasn't many friends around here.

    For good reason.

    Sorry, I get these weekly in my inbox ans rather than delete them I thought I'd post it here.

    I had no idea he didn't have a great rep.


  5. #5

    Default Re: Weekly Market & Economic update

    I noticed a few on the XAO Analysis thread calling below 4000 points so after reading this attached article I find it hard to believe high 3000's for the All Ords but what a buying opportunity that could be. Never rule out another catastrophe I suppose. ( and grabs seat on the fence)

    AUSTRALIA'S export earnings will leap by nearly a quarter to $202.5 billion next financial year thanks to the China-led surge in commodity prices, a government forecaster says.
    Never let anyone dictate your life path.

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