Investment Week In Review - 26 April 2016

By Marcus Damen - April 26, 2016

Our Pitcher Partners Investment Services wrap up of weekly news and information impacting the markets.

News in Review

  • The minutes of the RBA's April Board meeting noted that while "continued low inflation would provide scope to ease monetary policy further", there remains "reasonable prospects for continued growth in the economy". It seems there is no great sense of urgency for any change in the policy stance, which remains dependent on "new information".

  • In China, March home price data remained consistent with the recent stronger trend despite persistently modest levels of sentiment. Prices rose in 62 of 70 cities in March, up from 47 cities in February, with prices in Shanghai now up 25.1% year on year.  Prices rose an even more remarkable 61.6% year on year in Shenzen.

  • In the US, the NAHB housing index was steady at 58 in April, with a small fall in the current sales index offset by small rises in the more forward-looking sales expectations and traffic flow indices. These indices are off their peaks but remain at reasonably robust levels. The overall index continues to suggest that we are unlikely to see a marked slowdown in growth in consumer spending.

  • New York Fed President William Dudley said that he thought that US economic news was “mostly favourable” and that the economic outlook had started to improve in Europe. As far as Fed policy is concerned, Dudley commented that “monetary policy adjustments are likely to be gradual and cautious, as we continue to face significant uncertainties and the headwinds to growth from the financial crisis have not fully abated”.

  • Oil prices rose strongly, mostly due to a labour strike in Kuwait that has cut production by an estimated 60%.  Workers fear reduced salaries, benefits and staff layoffs will be part of a planned government overhaul of the payroll system in the public sector. 

  • The Australian dollar hovered around 10 month highs, buoyed by the unexpected resilience in oil prices. The Aussie last fetched 77.5 US cents after gaining more than a dollar in an overnight trade. The currency, alongside equities and other commodities, largely followed the encouraging strength in crude prices, with Brent oil gaining 8 US cents to $US43.18/barrel. Iron ore jumped 3.6% to $US60.36/tonne.

  • The New York primary elections saw Hillary Clinton win the Democrats vote and Donald Trump win the Republican vote.  



While Hillary Clinton and Donald Trump’s victories in New York were quite convincing (both won approximately 60% of their respective votes) it is still uncertain whether they can win enough delegates to secure their nominations outright. Therefore, the nominations may be decided at the National Conventions in July.   

According to SportsBet, Hillary Clinton is a clear favourite to win the US Presidency (with odds of $1.33 versus Donald Trump at $5.50), while the Liberals with Malcolm Turnbull at the helm are a clear favourite to win the Australian Federal Election (with odds of $1.25 versus Labor at $3.80).  

The popular press and opinion polls, however, seem to have both of these races running much closer than the odds above would suggest, so it will be interesting to see how accurate they end up being.

PPIS Seminar – Where to From Here?
2 May 2016

With market volatility remaining high, constant fears about the collapse of China and predictions of oil hitting US$10bbl you could easily be forgiven for asking if there is any upside to global markets. To find out if it is all doom and gloom or just a bumpy ride to new market highs we have asked Nikki Thomas, Magellan portfolio manager, and James Holt, Perpetual Investment Specialist, to shed light on these topics at our upcoming client seminar.Please contact Amy Dunstan on 03 8610 5692 if you would like to attend.


The Week Ahead

  • US: Fed Interest Rate Decision, Fed's Monetary Policy Statement, USD Durable Goods Orders (MAR P)
  • Australia: Consumer Price Index (YoY) (Q1)
  • Europe: Consumer Price Index - Core (YoY) (Apr), Consumer Confidence (Apr)
  • China: CB Leading Economic Index (Dec)
  • Japan: BoJ Interest Rate Decision,  BoJ Monetary Policy Statement 

Company News:

  • Woodside Petroleum's (WPL) first-quarter sales revenue, while down on the prior quarter, was 10% ahead of what UBS had forecast as liquefied natural gas prices held up despite falling crude-oil prices. Quarterly production of 23.7 million barrels of oil equivalent was down 4.8% on-quarter and in line with UBS's forecast.

  • BHP spinoff South 32 (S32) has cut third quarter production at several businesses but remains on track to meet its full-year guidance across all its units. The company improved alumina production 6.9% in the three months to March 31 and lifted metallurgical coal, but energy coal production was down 15.9%, nickel was down 8.5% and silver was down 12.7%.

  • Fortescue's (FMG) director of development has quit the mining company to take up a full-time role with the Mormon church. Peter Meurs has resigned his board and executive positions for what Fortescue says is a "full-time international role" with The Church of Jesus Christ of Latter-Day Saints.

  • Qantas (QAN) fell 10.8% in Tuesday’s trade after reporting a weaker than expected March quarter trading update, in which the company's release suggested March quarter unit revenue (RASK) was down around 5%, representing a significant deterioration from the +2% outcome for the six months to December 2015.

  • Goldman Sachs has officially launched an online bank aimed at households and small businesses as it expands from its Wall Street base and aims for the masses.  The online only bank permits customers to open an account for as little as $1, a big shift for a financial powerhouse that has built its reputations serving billionaires. 


Markets in review


Capital Return





S&P ASX 200








S&P 500
























$1 Australian buys you:


Biggest winners and losers last week - by sector


Biggest winners and losers last week - by company


This material is intended for the use of the clients of Pitcher Partners Investment Services only.  It is current at the date of preparation, but may be subject to change.  This document does not constitute financial product advice.  It is of a general nature and has been prepared without taking into account any person’s objectives, financial situation or needs.  Before acting on the information you should consider the appropriateness of it having regard to your objectives, financial situation or needs and seek independent advice.  You should obtain and consider a Product Disclosure Statement in relation to any financial product before making any decision about acquiring the product.  To the maximum extent permitted by law, Pitcher Partners Investment Services Pty Ltd and its representatives will not be liable for any loss or damage incurred by any person directly or indirectly for any use or reliance on this document.


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