The Week that Was – 15th to 19th July 2013

20Jul13

It felt like a pretty good week until Friday when we gave back most of the gains.

• The Australian equity market this week continued to grind upwards, opening from 4974 but lost ground on the final day, closing the week down 0.04% to finish at 4972.
• The Reserve Bank of Australia on Tuesday said in their July Board Minutes that the rebalancing of expectations around United States fiscal policy, combined with concerns over tightening liquidity conditions in China are weighing on the domestic economy, and left rates on hold at 2.75%.
• RIO and BHP released quite good production numbers during the week and the market received them accordingly.
• Some data points from the week included:
  • US Weekly jobless claims fell to the lowest since May
  • Strong UK retail data
• Across the ASX 200 sectors, best performance was in Telecoms up 1.4%, Metals & Mining up 0.9% and Energy up 0.7%.  Lower over the week were IT down 1.9%, Consumer Staples down 1.4%, Healthcare down 1% and Industrials and Utilities down 0.8 and 0.7% respectively.
• AUD continued to fall after a mid-week rise on the Chinese positive GDP numbers and finished up around 0.9181, now down -3.4% for the month.
• US AAA credit rating was affirmed by Moodys and Wall Street rallied as the Banks showed good result.  However, worse than expected results from Google and Microsoft dampened the mood and the record bankruptcy of the City of Detroit. Nevertheless, the S&P and the Dow Jones both exceeded and flirted with new highs.
• European markets rose for the week with the German Dax , London’s FTSE100 and French CAC40 all about 3% from their 52 week highs, on a successful Spanish bond auction and optimistic sentiment.
• Asian markets mainly range traded for the week with the Hang Seng in HK up marginally while the Nikkei traded up strongly across the week only to fall back on Friday giving back most of its gains after talk of increased taxes and before this weekend’s elections.
• The Chinese economy expanded in line with expectations in the June quarter. China’s gross domestic product (GDP) came in at 7.5% for the quarter, down slightly from the previous quarter’s 7.7%, but in line with the official government target for the year. China’s first-half GDP came in at 7.6%.
• Commodities:
  • Copper range traded around 3.12 , 10% off its recent three month highs, but well down for the year
  • US Crude-oil hit a 16 month high on demand as West Texas Intermediate rose to $108.04bbl
  • Gold had a volatile week hitting $1298 after a week low of about $1,273 and finishing around $1288.
• Takeovers announced included:
  • AGL Energy for Aus Power & Gas
  • Resimac for RHG (the ‘rump’ of former RAMS HomeLoans”)
  • APA for Envestra

The Week ahead:

The things we are looking at for next week include:

• Release of QII Consumer Price Index.  We don’t expect a big change from previous benign inflation numbers
• Kiwi Central Bank will review its interest rates and we expect rates to stay the same.
• There will be a large number of US data released that will continue to give a more accurate picture of the state of the US economy.
• In Europe there will be a UK GDP preview, and industrial activity indicators (flash PMI) for Germany and the Eurozone.

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