The Experts

James
Craig James
Economy Expert
+ About Craig James
About Craig James

Craig James is CommSec’s Chief Economist.

On leaving school Craig James joined the (then) Rural Bank, whilst undertaking university studies. He received his Bachelor of Commerce (Economics) at University of NSW in 1984 and then a Master of Commerce (Economics) at the same university in 1988.

He remained at the Rural Bank, which became the State Bank over time and then Colonial, working in branches, Corporate, Planning and Economic Research.

He became chief economist of Colonial Group in September 1987, before becoming chief economist at CommSec in August 2000 with the Commonwealth takeover of Colonial.

In 2002 Craig had a sea-change, joining the Australian Financial Review. He had always wanted to pursue a role in journalism and enjoyed the role as an economic commentator and analysts, finding that he could pursue a journalistic-type role as well as doing more electronic media work at CommSec and rejoined the group in 2003.

On taking the reigns of chief economist at Colonial, Craig endeavoured to style their research in a “user-friendly” way – something that set their research apart and still does today. The approach has been successful in their media work and in promoting Colonial, and then CommSec, to the general public. CommSec is the most quoted economic group in the mainstream media.

CommSec economic reports are a bit different in that they devise tools such as the ‘Mums and Dads’ share index and the iPod index, and undertake research on the weather and demographic changes to show how they affect the economy.

Craig currently does around 2-3 regular TV crosses a day, ad hoc radio and newspaper interviews and writes regular commentaries as well as presenting to staff, clients and external organisations.

Outside work, Craig's main interests are athletics (cross country in winter), weight training, reading widely across a range of newspapers, magazines and electronic media, and trying to keep up with the children.

Good morning, Australia!

Monday, March 18, 2019

How’dy USA

In US economic data on Friday industrial production rose 0.1% in February (forecast +0.4%). Consumer sentiment rose from 93.8 to 97.8 in March (forecast 95.3). Job openings (as measured by the JOLTS series) rose from 7.479 million to 7.581 million in January (forecast 7.31m). Capital outflows rose from US$113.5 billion to US$143.7bn in January. The Empire State manufacturing index fell from +8.8 to +3.7 points in March (forecast +10)

The US share markets rose on Friday. Reuters reports China's state-run Xinhua news agency as saying that "Washington and Beijing were making substantive progress on trade talks, providing relief after news that a summit to seal a deal between the two sides would not happen at March-end." The Dow Jones index rose by 139 points or 0.5%. The S&P500 index rose 0.5%. And the Nasdaq index rose by almost 58 points or 0.8%. Over the week the Dow rose by 1.6%, the S&P 500 lifted 2.9% and the Nasdaq gained 3.8%.

US treasuries rose on Friday (yields lower) in response to softer economic data. Traders look ahead to the US Federal Reserve meeting over Tuesday and Wednesday. US 2-year yields fell by 2 points to 2.44% and US 10-year yields fell by 4 points to 2.59%. Over the week US 2-year yields fell by 1 point and US 10-year yields were down by 3.5 points.

Bonjour Europe

European share markets rose on Friday to 5-month highs. Investors were comforted by the week's Brexit votes. There was also news of progress on US-China trade talks. The pan-European STOXX600 index rose by 0.7%. The German Dax gained 0.9% and the UK FTSE was up by 0.6%. In London trade, shares of Rio Tinto fell by 0.4% while BHP fell by 0.7%.

Hello, world!

Major currencies were mixed against the US dollar in US and European trade compared with the Asia close. The Euro held between US$1.1300 to US$1.1340 and was near US$1.1325 in late US trade. The Aussie dollar held between US70.70 cents and US70.95 cents and was near US70.88 cents in late US trade. And the Japanese yen rose from 111.75 yen per US dollar to JPY111.40 and was near JPY111.45 in late US trade.

Global oil prices fell just slightly on Friday. The International Energy Agency said on Friday that the market could show a modest surplus in the first quarter of 2019 before flipping into a deficit in the second quarter by about 0.5 million barrels per day. Investors weighed higher US production, OPEC production cuts, a slower global economy and Chinese economic stimulus. Brent crude fell by US7 cents or 0.1% to US$67.16 a barrel and the US Nymex price fell by US9 cents or 0.2% to US$58.52 a barrel. Over the week Brent rose 2.2% with Nymex up 4.4%.

Base metal prices were generally lower on Friday. Lead lost 2.5% and zinc fell 1.7%. But copper and nickel rose by almost 0.5%. Over the week metals were mixed with zinc, aluminium and copper up by as much as 3.9% while other metals fell by around 1.4%.

The gold futures price rose by US$7.80 an ounce or 0.6% to $1,302.90 an ounce on Friday. The spot gold price was near US$1,301 an ounce in late US trade. Over the week gold rose by US$3.60 or 0.3%. Iron ore fell by US90 cents or 1.0% on Friday to US$86.20 a tonne. Over the week iron ore rose by US$1.35 or 1.6%.

G’day Australia

In Australia no major data is expected. In the US the National Association of Home Builders index is released.

 

Good morning, Australia!

Tuesday, March 12, 2019

How’dy USA

In US economic data, retail sales rose by 0.2% in January (forecast: flat) while sales excluding autos rose by 0.9% (forecast +0.2%). Consumer inflation expectations fell from 2.97% to 2.79% in February. Business inventories rose by 0.6% as expected in December.

US share markets rose on Monday. The key exception was Boeing with shares down 5.3% following Sunday's fatal Ethiopian Airlines crash. Technology stocks led the gains. Shares in Apple rose by 3.5% after a broker upgrade. The Dow Jones index rose by 201 points or 0.8%. The S&P500 index gained 1.5%. And the Nasdaq index rose by 150 points or 2.0%.

US treasuries fell on Monday (yields higher) in response to firmer retail sales data and stronger equities markets. US Treasury auctioned $38 billion in three-year notes on Monday and will sell $24 billion in 10-year notes on Tuesday and will sell $16 billion in 30year bonds on Wednesday. Also, Reuters report that on the corporate debt side, four US investment grade deals were announced on Monday. US 2-year yields rose by 2 points to 2.48% and US 10-year yields rose by 2 points to 2.64%.

Bonjour Europe

European share markets rose on Monday for the first time in four sessions. Banks rose by 2.1%, assisted in part by news of a potential merger between Deutsche Bank and Commerzbank. Shares in Commerzbank rose 7.15% and Deutsche Bank rose by 5%. Shares in Boeing fell by over 7% in New York trade after some airlines grounded the company's new 737 MAX 8 passenger jet following Sunday's fatal Ethiopian Airlines crash. Shares in rival Airbus rose by 1.3%. The pan-European STOXX600 index rose by 0.8%. The German Dax also rose by 0.8% and the UK FTSE lifted by 0.4%. In London trade, shares of Rio Tinto rose by 0.7% while BHP rose by 1.0%.

Hello, world!

Major currencies were mixed against the US dollar in US and European trade compared with the Asia close. The Euro fell from US$1.1255 to US$1.1220 and was near US$1.1245 in late US trade. The Aussie dollar rose from lows near US70.35 cents to highs near US70.75 cents and was near US70.70 cents in late US trade. And the Japanese yen held between 111.00 yen per US dollar and JPY111.30 and was near JPY111.20 in late US trade.

Global oil prices rose by 1.3% on Monday. Saudi Energy Minister Khalid al-Falih said on Sunday that that an end to OPEC-led supply cuts was unlikely before June. But Reuters reported the International Energy Agency as saying that crude output in the United States will rise nearly 2.8 million bpd to 13.7 million bpd in 2024 from about 11 million bpd in 2018. Brent crude rose by US84 cents or 1.3% to US$66.58 a barrel and the US Nymex price rose by US72 cents or 1.3% to US$56.79 a barrel.

Base metal prices were generally down by between 0.8-1.5% on Monday. But while tin, aluminium and nickel fell 1.5%, zinc rose 2.0% and copper rose 0.2%.

The gold futures price fell by US$8.20 an ounce or 0.6% to $1,291.10 an ounce. The spot gold price was near US$1,293 an ounce in late US trade. Iron ore fell by US$1.85 or 2.2% to US$83.00 a tonne.

G’day Australia

In Australia, the NAB business survey is released with credit and debit card lending, broader lending finance data and consumer confidence survey results. In the US, consumer price data is released with the NFIB business optimism index.

 

Good morning, Australia!

Monday, March 11, 2019

How’dy USA 

In US economic data on Friday non-farm payrolls rose by 20,000 in February (forecast +180,000). The jobless rate fell from 4% to a near 49-year low of 3.8%. Average hourly earnings rose by 0.4% (forecast +0.3%). Housing starts rose by 18.6% to a 1.23 million annual rate (forecast 1.197m).

US share markets fell slightly on Friday with major indices down for the fifth straight day. Job growth was lower than expected but wage growth hit 10-year highs. The energy sector eased 2% in line with a lower oil price. The Dow Transport index lost 0.5%. Shares in supermarket wholesaler Costco Wholesale rose by 5.1% after quarterly profit topped estimates. The Dow Jones index fell by 23 points or 0.1% after being down 221 points. The S&P500 index lost 0.2%. And the Nasdaq index fell by 13 points or 0.2%. Over the week the Dow and S&P 500 fell by 2.2% and the Nasdaq fell by 2.5%.

US treasuries were only modestly higher on Friday (yields lower). Economic data was mixed but equities and commodities were mildly weaker. US 2-year yields fell by 1 point to 2.47% and US 10-year yields fell by 1 point to 2.63%. Over the week US 2-year yields fell by 9 points and US 10-year yields down by 13 points.

Bonjour Europe 

European share markets fell on Friday. The weak US jobs data weighed on sentiment. And bank shares fell 1.9%, extending losses after the European Central Bank decision on Thursday. German industrial orders fell 2.6% in January - the biggest drop in seven months. The pan-European STOXX600 index fell by 0.9%. The German Dax lost 0.5% and the UK FTSE fell by 0.7%. In London trade, shares of Rio Tinto fell by 0.6% while BHP rose by 0.1%.

Hello, world!

Major currencies were stronger against the US dollar in US and European trade compared with the Asia close. The Euro rose from US$1.1195 to US$1.1245 and was near US$1.1240 in late US trade. The Aussie dollar rose from lows near US70.00 cents to highs near US70.52 cents and was at the highs in late US trade. And the Japanese yen eased from 110.83 yen per US dollar to JPY111.20 and was near JPY111.15 in late US trade.

Global oil prices fell by 0.8-1.0% on Friday. US employment rose by less than expected in February, but housing starts were far stronger than forecasts. And the number of oil rigs in operation in the US fell to 10-month lows. Brent crude fell by US56 cents or 0.8% to US$65.74 a barrel and the US Nymex price fell by US59 cents or 1.0% to US$56.07 a barrel. Over the week Brent rose 1% with Nymex up 0.5%.

Base metal prices were down by between 0.5-1.2% on Friday. Nickel was down the most with zinc and tin down the least. Aluminium was the exception, up 0.3%. Over the week metals fell between 0.8-3.5% with zinc down most and nickel down the least.

The gold futures price rose by US$13.20 an ounce or 1.0% to $1,299.30 an ounce on Friday. The spot gold price was near US$1,298 an ounce in late US trade. Over the week gold rose by just 10c. Iron ore fell by US$2.20 or 2.5% on Friday to US$84.85 a tonne. Over the week iron fell by US$2.45 or 2.8%.

G’day Australia

In Australia no major economic data is expected. There are holidays in ACT, Victoria, South Australia and Tasmania. In the US, retail sales data is released with business inventories and inflation expectations. The Federal Reserve chair delivers a speech.

 

Slowdown in key events next week

Friday, March 08, 2019

This week kicks off on Tuesday

The week kicks off on Tuesday when National Australia Bank releases its February business survey. In January the business conditions index rose from a four-year low of +2.6 points to +6.6 points (long-term average +5.8 points). And the business confidence index rose from +2.7 points to +3.6 points in January, below the long-term average of 6.0 points. But rolling annual averages for both business conditions and confidence were above long-term averages. The Australian Bureau of Statistics (ABS) releases its publication “Lending to households and businesses”. In December, lending commitments to households fell by 4.4 %. But more positively, data showed that the share of first home buyers eased only modestly from a 6-year high of 27% in November to 26.5% in December.

Tuesday also sees The Reserve Bank Deputy Governor Guy Debelle deliver a talk: “Climate Change & the Economy” at a Public Forum hosted by the Centre for Policy Development in Sydney. The regular weekly reading on consumer confidence is published by ANZ and Roy Morgan. Sentiment has been fluky from week-to-week, but the index is still above longer-term averages.

On Wednesday

Westpac and the Melbourne Institute release the March monthly consumer confidence report. The monthly consumer sentiment data is more of a check on the more frequent weekly series. But the monthly report will be of interest this month as it contains the latest quarterly views of households on the wisest place to put new savings.

On Thursday

The ABS issues a longer-term report: “Household and Family Projections, Australia, 2016 to 2041.” The report is of interest for governments and businesses for planning purposes.

On Friday

The ABS issues the January report: “Overseas Arrivals and Departures”. While there is much interest in the tourism arrivals and departures data, the report also contains figures on overseas migration.  Tourist arrivals rose by 0.6% to 782,700 in December. Arrivals rose 4.9% over the year. Tourist departures rose by 1.2% in December to be up 8.0% over the year – the strongest annual growth rate in 19 months. And in terms of migration flows, net permanent and long-term arrivals stood at 291,250 in the year to December – a fresh 4½-year high. 

Overseas: US and Chinese ‘top-shelf’ indicators

A bevy of ‘top-shelf’ indicators are due in the US and China in the coming week.

On Monday

The US retail sales data for January will be released on Monday. The December figures came as something of a shock, with sales down 1.2%, although after rising 1.1% in the two previous months. Economists tip a 0.1% lift in January sales.

On Tuesday

The February data on consumer prices is released with the NFIB business optimism index and weekly chain store sales. Economists estimate that the core measure (excludes food and energy) rose by 0.2% with the annual rate dropping from 2.2% to 2.1%.

On Wednesday

The equivalent inflation data for business (producer prices) is released with durable goods orders, construction spending and the weekly measure of mortgage finance. Economists estimate that the core measure (excludes food and energy) rose by 0.2% with the annual rate steady at 2.6%. And durable goods orders (a measure of business investment) are estimated to have fallen 0.7% in January.

On Thursday

Data on export and import prices are released with new home sales data and the weekly figures on new claims for unemployment insurance. In China the January and February readings on economic activity – retail sales, production and investment – are released. Given the variable timing of Lunar New Year, January and February data need to be read together. Money supply and lending data are also scheduled for Thursday

On Friday

The February data on industrial production is released with the Empire State manufacturing index, consumer sentiment, JOLTS job openings and capital flows. Economists tip a 0.1% lift in production after a 0.6% fall in January. Whilst in China data on house prices is released – the February reading was up 10% on the year.

 

Good Morning, Australia

Monday, March 04, 2019

How’dy USA

In US economic data on Friday personal income fell 0.1% in January (forecast +0.4%) after rising 1% in December. Spending fell 0.5% (forecast -0.2%) in December with January data not available. The Federal Reserve's preferred inflation indicator - the core personal consumption deflator - rose 0.2% in December as expected to be up 1.9% over the year. The ISM manufacturing index eased from 56.6 to 54.2 in February (forecast 55.5). Consumer sentiment rose from 91.2 to 93.8 in February (forecast 95.7).

US share markets rose on Friday. Bloomberg reported that a US China summit on trade could happen by mid-March. Economic data was mixed but inflation was retrained. The Dow Jones index rose by 110 points or 0.4%. The S&P500 index was higher by 0.7%. And the Nasdaq index was up by 63 points or 0.8%. Over the week the Dow fell 0.02% but the S&P 500 rose by 0.4% and the Nasdaq rose by 0.9%. The Nasdaq has risen for 10 straight weeks, the longest winning streak since 1999.

US treasuries were weaker on Friday (yields higher). US 2-year yields rose by 4 points to 2.56% and US 10-year yields rose by 5 points to 2.76%. Over the week US 2-year yields rose by 7 points and US 10-year yields rose by 10 points.

The gold futures price fell by US$16.90 an ounce or 1.3% to $1,299.20 an ounce on Friday. The spot gold price was near US$1,293 an ounce in late US trade. Over the week gold fell by US$33.60 or 2.5%. Iron ore rose by US$2.50 or 2.9% to US$87.30 a tonne. Over the week iron rose by US60 cents or 0.7%.

Bonjour Europe

European share markets rose to 5-month highs on Friday. The pan-European STOXX600 index rose by 0.4%. German retail sales jumped 3.3% in January with the jobless rate at a 29-year low of 2.9%. Britain's WPP, the world's biggest advertising company, rose 4.9% in reaction to earnings results. The German Dax gained 0.8% and the UK FTSE rose by 0.5%. In London trade, shares of Rio Tinto rose by 0.5% while BHP fell by 0.3%.

Hello, world!

Global oil prices fell 2.0-2.5% on Friday. The US ISM manufacturing index fell to 2-year lows, igniting concerns about global oil demand. But the number of oil rigs in operation in the US fell by 10 in the latest week, the second fall in five weeks. And Reuters survey data showed that OPEC pumped 30.68 million barrels per day (bpd) in February, down 300,000 bpd from January and the lowest OPEC total since 2015. Brent crude fell by US$1.24 or 1.9% to US$65.07 a barrel and the US Nymex price fell by USUS$1.42 or 2.5% to US$55.80 a barrel. Over the week Brent fell 3.1% with Nymex down 2.5%.

Major currencies were weaker against the US dollar in US and European trade compared with the Asia close. The Euro fell from US$1.1405 to US$1.1350 and was near US$1.1375 in late US trade. The Aussie dollar fell from highs near US71.20 cents to lows near US70.70 cents and was near US70.80 cents in late US trade. And the Japanese yen eased from 111.66 yen per US dollar to JPY112.07 and was near JPY111.90 in late US trade.

G’day Australia

In Australia ANZ job ads are released with building approvals and the quarterly data on profits, sales and inventories. In the US, construction spending data is released with the ISM New York index.

 

Good Morning, Australia

Monday, February 25, 2019

Howd’y USA

There was no major US economic data on Friday but six Federal Reserve officials delivered speeches. Fed vice chair Richard Clarida said on Friday that the central bank will keep an open mind as it begins a broad review of its monetary policy framework.

US President Trump said that agreement had been reached with China on currency manipulation. President Trump says there is a good chance of a broader trade deal.

US sharemarkets rose to three-month highs on continued optimism about China-US trade talks. The Dow Jones index was up by 181 points or 0.7%. The S&P500 index was higher by 0.6%. And the Nasdaq index was up by 68 points or 0.9%. Over the week the Dow and S&P 500 rose by 0.6% and the Nasdaq rose by 0.7%. The Dow has risen for nine straight weeks, the longest winning streak since 1995.

US treasuries were firmer on Friday (yields lower). US 2-year yields fell by 3 points to 2.50% and US 10-year yields fell by 3 points to 2.65%. Over the week US 2-year yields fell by 3 points and US 10-year yields fell by 2 points.

Major currencies were mixed against the US dollar in US and European trade compared with the Asia close. The Euro broadly held between US$1.1315 to US$1.1355 and was near US$1.1340 in late US trade. The Aussie dollar rose from lows near US70.90 cents to highs near US71.50 cents and was near US71.25 cents in late US trade. And the Japanese yen rose from 110.90 yen per US dollar to JPY110.55 and was near JPY110.68 in late US trade.

Global oil prices rose modestly on Friday. The number of oil rigs in operation in the US fell by four in the latest week, the first fall in four weeks. Data from market intelligence provider Genscape showed that crude inventories in West Texas dropped this week to the lowest in four months. Brent crude rose by just 5 cents to US$67.12 a barrel and the US Nymex price rose by US30 cents or 0.5% to US$57.26 a barrel.

Base metal prices rose by up to 1.9% on Friday with copper up the most although lead and aluminium both rose by just 0.3%. Over the week all but one of the metals rose by between 2.0-5.3% with copper up the most. Lead was the exception, down 0.1%.

The gold futures price rose by US$5.00 an ounce or 0.4% to $1,332.80 an ounce. The spot gold price was near US$1,328 an ounce in late US trade. Over the week gold rose by US$10.70 or 0.8%. Iron ore was unchanged at US$86.70 a tonne. Over the week iron fell by US65 cents or 0.7%.

Bonjour, Europe!

European sharemarkets rose modestly on Friday. The focus was on mixed earnings results. In the UK, Canada's Saputo bought Britain's largest dairy food company Dairy Crest  for about 975 million pounds ($1.3 billion). The pan-European STOXX600 index rose by 0.2%. The German Dax gained 0.3% and the UK FTSE rose by 0.2%. In London trade, shares of Rio Tinto rose by 1.7% while BHP rose by 2.2%.

G’day Australia

In Australia there is no major economic data scheduled. In the US the Chicago Federal Reserve national activity index is released with the Dallas Fed manufacturing index.

 

Thinking about growth

Friday, February 22, 2019

The week kicks off on Tuesday

The regular weekly reading on consumer confidence is published by ANZ and Roy Morgan. Confidence levels have been a bit fluky on a week-to-week basis, but readings are still above ‘normal’ or longer-term averages.

On Wednesday

The Australian Bureau of Statistics (ABS) releases the “Construction Work Done” estimates for the December quarter. The figures on home building activity are most important as they shine a light on the size of the “dwelling investment” component of gross domestic product (GDP or the economic growth measure). Construction work done fell by 2.8% in real (inflation-adjusted) terms in the September quarter with residential building down 1%.

On Thursday

The ABS issues the publication Private New Capital Expenditure and Expected Expenditure” for the December quarter. In the September quarter spending on buildings and equipment fell by 0.5%. But the report also includes estimates of future investment and the upgrade in the September quarter was the biggest in 19 years. Also on Thursday, the ABS issues more detailed estimates on the job market including regional and demographic estimates. And the Reserve Bank releases its “Private Sector Credit” data on Thursday (a measure of loans outstanding). Annual credit growth fell to a near 5-year low of 4.3% in December.

On Friday

There are two survey measures of activity in the manufacturing sector – from the Commonwealth Bank and the Australian Industry Group. Also on Friday, CoreLogic releases its comprehensive estimates of home prices for February. In January, the CoreLogic Home Value Index of national home prices fell by 1% to be down 5.6% over the year.

In the USA

US economic growth data and testimony by the Federal Reserve chair are the two key events in the coming week.

Next Monday

In the US when the Chicago Federal Reserve national activity index is released with the Dallas Fed manufacturing index and wholesale inventories data.

Tuesday

The Federal Reserve chair, Jerome Powell, testifies on monetary policy and the economy to the Senate Banking Committee. The follow-up appearance before the House Financial Services Committee is on Wednesday. The Fed chair will give his latest assessment on jobs and inflation and may provide a few words on whether the flat yield curve is still of consequence in the current environment.  In economic data on Tuesday, data on housing starts will be released with consumer confidence. Both the FHFA and S&P/Case Shiller home price measures are also released.

Wednesday 

In the US, data on factory orders and pending home sales are scheduled with the regular weekly gauge of mortgage applications.

Thursday

In the US the delayed economic growth data for the December quarter is expected. Economists believe the US economy expanded at a 2.6% annual pace in the quarter, down from 3.4% in the September quarter. Also on Thursday, the US goods trade balance for January is issued with the Chicago purchasing managers index, wholesale inventories and the weekly data on new claims for unemployment insurance (jobless claims).

Friday

In the US a plethora of economic data is set down for release. Included is personal income, the ISM manufacturing gauge, new auto sales figures and the February reading on consumer sentiment from the University of Michigan. The personal income release includes a key inflation reading. The personal consumption deflator is the preferred inflation measure of the Federal Reserve. Also the ISM manufacturing gauge is seen little-changed from January’s reading of 56.6

The last of earnings season

The Australian corporate reporting season winds down in the coming week. Major companies expected to release earnings results include:

Monday: Boral, BlueScope Steel; LendLease; QBE Insurance;

Tuesday: Caltex; Estia Health; Spark Infrastructure.

Wednesday: Bellamy’s; OZ Minerals; Rio Tinto; SEEK.

Thursday: Harvey Norman; Adelaide Brighton; Ramsay Health Care.

 

Good Morning, Australia

Monday, February 18, 2019

Howd’y USA

In US economic data, export prices fell 0.6% in January (forecast -0.1%) and import prices fell 0.5% (forecast -0.1%). Consumer sentiment rose from 91.2 to 95.5 in February (forecast 94.5). Industrial production fell 0.6% in January (forecast +0.1%). The Empire State manufacturing index rose from 3.9 to 8.8 in February (forecast +0.7).

Chinese state news agency Xinhua reported China and the US had reached a consensus in principle on some key trade issuesChinese President XI Jinping said the talks will continue next week in Washington.  

US share markets posted solid gains in reaction to the news of progress on US-China trade talks. Trade sensitive stocks rose the most with Boeing up 2%. At the close the Dow Jones index was up by 444 points or 1.7%. The S&P500 index was up by 1.1%. And the Nasdaq index was higher by 45.5 points or 0.6%. Over the week the Dow rose 3.1% with the S&P 500 up 2.5% and the Nasdaq up 2.4%.

US treasuries were weaker on Friday (yields higher). Economic data was mixed while investors favoured growth-focussed assets like equities and commodities on news of the US-China trade talks. US 2-year yields rose by 2 points to 2.52% and US 10-year yields rose by 1 point to 2.66%. Over the week US 2-year yields rose by 5 points and US 10-year yields rose by 3 points.

Major currencies were generally firmer against the US dollar in US and European trade compared with the Asia close. The Euro rose from lows near US$1.1235 to US$1.1305 and was near US$1.1295 in late US trade. The Aussie dollar rose from lows near US70.80 cents to highs near US71.50 cents and was near US71.45 cents in late US trade. And the Japanese yen held between 110.26 yen per US dollar and JPY110.63 and was near JPY110.48 in late US trade.

Global oil prices rose by up to 2.6% on Friday. Investors were encouraged by progress at US-China trade talks. And there was concern about near-term oil supplies on news of an outage at Saudi Arabia's Safaniya offshore oilfield. Brent crude rose by US$1.68 or 2.6% to US$66.25 a barrel and the US Nymex price rose by US$1.18 or 2.2% to US$55.59 a barrel. Over the week Brent rose by 6.8% and Nymex rose by 5.4%.

The gold futures price rose by US$8.20 an ounce or 0.6% to $1,322.10 an ounce. The spot gold price was near US$1,321 an ounce in late US tradeOver the week gold rose by US$3.60 or 0.3%. Iron ore fell by US45 cents or 0.5% to US$87.35 a tonne. Over the week iron ore fell by US$6.85 or 7.3%.

Bonjour, Europe!

European share markets rose on Friday on news of the US-China trade talks. Also banks rose 2.8% after European Central Bank board member Benoit Coeure said a new round of TLTROs - cheap multi-year loans to banks - is "possible". The pan-European STOXX600 index rose by 1.4% to 3-month highs, and gained 3% for the week. The German Dax gained 1.9% while the UK FTSE lifted 0.6%. In London trade, shares of both Rio Tinto and BHP rose 1.2%.

Top of the morning, London

Base metal prices were firmer on the London Metal Exchange on Friday, lifting by up to 2.4% with zinc up the most. Over the week metals were mixed. Zinc, nickel and aluminium fell 1.4-1.9%. Other metals rose up to 0.7%.  

G’day Australia

No major economic data is scheduled. US markets are closed for Presidents Day.

 

Have a great day, Australia!

 

Good morning, Australia

Monday, February 11, 2019

Howd’y USA

Reuters reported that US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will travel to Beijing for principal-level meetings on trade over February 14-15 according to a White House statement. US sharemarkets ended mixed on Friday. Shares of Coty, Mattel and Motorola lifted after earnings results. Shares in videogame publisher Electronic Arts rose 16.05% after it said that its game Apex Legends had attracted 10 million players in three days. At the close the Dow Jones index was down by 63 points or 0.3%. But the S&P500 index was up by 0.1%. And the Nasdaq index was higher by 10 points or 0.1%. Over the week the Dow rose by 0.2% with the S&P 500 up by 0.1% and the Nasdaq gained 0.5%. US treasuries were firmer on Friday (yields lower). US 2-year yields fell by 2 points to 2.47% and US 10-year yields fell 3 points to 2.63%. Over the week US 2-year yields fell by 4 points and US 10- year yields fell by 5 points. Major currencies were mixed against the US dollar in US and European trade compared with the Asia close. The Euro fell from highs near US$1.1350 to US$1.1320 and was near US$1.1325 in late US trade. The Aussie dollar rose from lows near US70.70 cents to highs near US71.00 cents and was near US70.90 cents in late US trade. And the Japanese yen lifted from 109.89 yen per US dollar to JPY109.66 and was near JPY109.72 in late US trade.

Global oil prices rose modestly on Friday. Investors were reluctant to take fresh positions ahead of US-China trade talks. The number of oil rigs in operation in the US rose by 7 to 854 in the past week. Reuters reported that US lawmakers advanced a bill known as the No Oil Producing and Exporting Cartels Act, or NOPEC, in the House of Representatives. The bill could target OPEC producers for anti-trust behaviour. Brent crude rose by US39 cents or 0.6% to US$62.02 a barrel and the US Nymex price rose by US8 cents or 0.2% to US$52.72 a barrel. Over the week Brent fell by 1.2% and Nymex fell by 4.6%.

Bonjour, Europe

European sharemarkets fell on Friday. The pan-European STOXX600 index fell by 0.6% on Friday and fell 0.4% for the week - the first weekly decline in five weeks. The autos sector lost 2.2%. But shares in cosmetics maker L'Oreal rose 1.3% and shares in luxury handbag maker Hermes rose 1.5% on reporting better than feared demand from China. The German Dax index fell by 1.1% while the UK FTSE lost 0.3%. In London trade, shares of both Rio Tinto and BHP ended flat over the session.

Top of the morning, London

Base metal prices were mixed on the London Metal Exchange on Friday. Tin and lead rose by up to 0.5% while other metals fell by up to 3.2% with nickel down the most and other metals fell by 0.6-0.8%. Over the week zinc fell 3.1% and lead fell 2.5% but copper rose by 1.2% with tin up 0.5%. The gold futures price rose by US$4.30 an ounce or 0.3% to $1,318.50 an ounce. The spot gold price was near US$1,314 an ounce in late US trade. Over the week gold fell by US$3.60 or 0.3%. Iron ore rose by US$3.70 or 4.1% to US$94.20 a tonne. Over the week iron ore rose by US$7.20 or 8.3%.

 

A mixed bag of data and events next week!

Friday, February 08, 2019

The week kicks off on Tuesday, when the Australian Bureau of Statistics (ABS) releases the new publication, Lending to Households & Businesses. The data includes all new lending commitments and may show further softening of home loan demand. And the January business survey will be issued from National Australia Bank. There was a pronounced softening of conditions and subdued reading on sentiment in the December survey. The business conditions index fell from +10.6 points in November to four-year lows of +2.2 points in December. The long-term average is +5.8 points. The NAB business confidence index eased slightly from +3.4 points to near three-year lows of +2.8 points in December, below the long-term average of 6.0 points. The weekly reading of consumer confidence is also issued Tuesday with Reserve Bank figures on credit and debit card lending. 

On Wednesday

Reserve Bank Head of the Economic Analysis Department, Alexandra Heath, delivers remarks at the Australian Business Economists Forecasting Conference. And the Westpac/Melbourne Institute monthly survey of consumer confidence. This report is more of a “check” on the weekly consumer sentiment data.

On Friday

A speech is expected from Christopher Kent, Assistant Governor (Financial Markets), Reserve Bank at a breakfast event hosted by foreign exchange provider XE.

Focus on Chinese economic data

The US Government shutdown is still playing havoc with the release dates for key economic data. Still, investors will also have to contend with Chinese data over the week, including trade and inflation. And trade talks continue between the US and China. The week begins on Tuesday in China with the January reading on foreign direct investment. In 2018, investment rose by 0.8% in yuan terms with analysts estimating that this equated to a 3% lift in US dollar terms over the year. Data on vehicle sales for January is also expected. And in the USweekly chain store sales data is issued along with the JOLTS job openings report and NFIB business optimism index. The number of unfilled jobs in November fell to the lowest level since June, though openings still exceeded unemployed Americans.

On Wednesday in the US, the monthly budget statement is released with weekly data on home loan applications and the consumer price Index. The core rate of inflation may have eased from 2.2% to 2.1% in January.

On Thursday in the USthe weekly jobless claims data (claims for unemployment insurance) is issued alongside producer prices and durable goods orders. The annual rate of core producer prices may have eased from 2.7% to 2.6% in January. And in China the January data on exports and imports is expected with lending growth figures.

On Friday, retail sales, industrial production, consumer sentiment, export/import prices, construction spending and the Empire State index are all scheduled for release. According to Adobe Analytics, e-commerce holiday season sales lifted by 16.5% from a year earlier signalling that overall retail sales were positive in December. Retail sales may have lifted 0.2%. And in China the latest inflation data is due – consumer and producer prices. Consumer prices are seen expanding at a 2% annual rate in January.

Our corporate reporting season moves into top gear

On Monday, companies reporting include Amcor, Bendigo & Adelaide Bank, Aurizon, GPT, Charter Hall Long WALE REIT and JB Hi-Fi.

On Tuesday: Challenger, Reckon and Transurban.

On Wednesday: Aveo Group, Bapcor, Computershare, CSL, Skycity Entertainment Group, and Tabcorp.

On Thursday: AMP, ASX, Evolution Mining, Goodman Group, IPH Limited, Magellan Financial Group, Newcrest, Suncorp, Tassal, Telstra, Treasury Wine Estate and Woodside Petroleum. 

On Friday: Abacus Property Group, Domain, Medibank, Healius, URB Investments and Whitehaven.

 

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