A weekly summary of the markets from the Pitcher Partners Investment Services division.
News in review
GDP in the U.S rose at an annualized rate of 0.2% in the March after advancing 2.2% the prior quarter. The weak result is believed to be mostly due to transitory issues, such as weather.
After holding the U.S. Federal Reserve Rate steady at 0%-0.25%, policy makers said some of the headwinds holding back the U.S. will probably fade and give way to “moderate” growth.
The Producer Price Index for Australia increased by 0.5% in the March quarter mainly due to rises in the prices received for computer and electronic equipment manufacturing, building construction and transport equipment manufacturing.
The CoreLogic RP Data Home Value Index showed home capital prices in Australia are up 0.8% last month to post a 2.5% quarterly and 7.9% annual rise.
Retail Sales in Japan fell by an annualised rate of 9.7% in March. Holding their rates steady, the Bank of Japan has said that consumer inflation is likely to reach 2% around the second half of 2015.
Britain's economy slowed more sharply than expected for the March quarter in a setback for Prime Minister David Cameron who has staked his campaign for re-election next week on the strength of the recovery. GDP grew by 0.3% in the March quarter compared to 0.6% in the previous quarter.
Preliminary Inflation data in the Eurozone indicated a flat to deflationary environment in April. German CPI estimates indicate deflation of 0.1% for April.
Chinese Manufacturing Purchasing Managers Index (PMI) data remained unchanged at 50.1 in April, while Non-Manufacturing PMI reduced to 53.4, indicating a mild increase in Chinese manufacturing activity.
Markets in review
Capital Return
Weekly
FYTD
CYTD
S&P ASX 200
0.8%
9.9%
9.6%
DOW JONES
0.0%
7.8%
1.7%
S&P 500
-0.3%
7.4%
2.2%
UK FTSE100
0.5%
3.0%
5.8%
FRENCH CAC40
2.5%
12.0%
15.9%
GERMAN DAX
3.2%
16.0%
16.3%
JAPANESE NIKKEI
2.5%
24.0%
7.7%
SHANGHAI COMPOSITE
2.0%
61.6%
2.3%
ASX200 Biggest movers for the week
ASX200 Sector performance for the week
The week ahead
Australia: The RBA will announce the Cash Rate; the Unemployment Rate for April will be closely watched and Building Approvals data is due for March.
US: The Unemployment Rate for April will be released.
China: Trade balance and Inflation data for April is due.
UK: Parliamentary Elections will be held.
Euro Zone: European Manufacturing PMI data is due for April.
Comment
Last week saw a reversal of recent trends, with the big miners and oil producers significantly outperforming the yield stocks (particularly financials) and defensives (healthcare). Government bonds have also experienced a few rough weeks as inflationary expectations begin to rise globally.
While recent domestic readings of headline inflation have been weak, core inflation has been at more normal levels and could potentially rise should oil prices rebound while our dollar remains low (ie petrol prices shoot back up).
European consumer prices also stopped falling and should this mark a turning point then global bonds may continue to be under pressure.
$1 Australian buys you
$0.7903
£0.5149
¥4.8937
¥94.591
€0.7044
$1.0404
Company announcements
National Australia Bank expects to raise more than $540 million by further selling down its stake in its former US subsidiary Great Western Bancorp.
Claims for damages caused by heavy winds and rain that battered New South Wales last week are expected to cost Suncorp Group Ltd $135 million, pushing the insurer's natural-disaster expenses for the financial year to almost A$1billion.
Strong housing markets in Sydney and Melbourne are underpinning demand for developer Mirvac's off-the-plan projects.
A proposal to build a $5.5 billion tolled tunnel linking Melbourne's West Gate Freeway to CityLink has been submitted by Transurban and is being considered by the Victorian Government, to take pressure off the Westgate Bridge.
The number of people flying Qantas and Jetstar has picked up, helped by a big increase in passengers on the airlines' international routes.
Australia's largest rail freight operator Aurizon has struck an 11-year performance based contract to haul coal for a Chinese-owned miner. Aurizon announced it would haul up to four million tonnes a year to the new Wiggins Island coal port at Gladstone in Queensland in a deal with Caledon Coal.
Bendigo Bank will issue around $200 million in new convertible preference shares to fund the redemption of existing preference shares.