Investment Week in Review - 30 January 2017

By Michelle Heffernan - January 30, 2017

Pitcher Partners' wrap up of issues impacting the markets over the last week.

News in Review

US

  • The American economy grew at an annualised pace of 1.9%, which was slightly lower than the expected 2.6%. Trump responded saying he will target 4% annual growth during his period of service as President.
  • Trump met with UK Prime Minister Theresa May to discuss a new bilateral trade deal following Brexit. Trump pushed for an ‘America first’ outcome, while May stated that any trade agreement would place Britain’s interests ahead of the US.
  • Trump has put a four month hold on allowing refugees into the US, and a temporary ban on travellers from Syria and six other Muslim-majority countries. Protests broke out in response.
  • The number of individuals who filed for unemployment claims rose by 22,000 but remain at the lowest levels since 1973, suggesting that US employers are confident enough to retain their workers.

Europe & the UK

  • In a vote of 8-3 the UK Supreme Court has ruled that an Act of Parliament is required to authorise the government to give notice under Article 50 of the Lisbon Treaty of the UK to withdraw from the European Union. In addition, the court ruled that the consent to proceed of the legislatures of Scotland, Northern Ireland and Wales is not required under the devolution settlements.
  • Eurozone consumer confidence rose slightly less than expected in January, though improved from December. There was a consistent improvement in confidence throughout 2016 and the January reading is the strongest since April 2015.

Australia

  • Australian leaders appeared to show support for Trump’s immigration ban, with Treasurer Morrison stating Trump was simply fulfilling election promises, Prime Minister Turnbull discussing the deal in a phone call with Trump, and Australian airlines Qantas and Virgin Australia instructing staff to refuse access to the US where appropriate.
  • Headline Consumer Price Index (CPI) rose a moderate 0.5% in the December 2016 quarter, down from 0.7% in the September quarter leaving the annual inflation rate at just 1.5%. This CPI number could encourage the RBA to leave rates on hold for the next few months as the current level is well below the Reserve Bank's 2-3% target.

China

  • Profits at China’s industrial firms rose by 2.3% in December from a year earlier, taking the 2016 annual growth rate to 8.5% and reversing the 2.3% growth decline seen in 2015. 

Comment

Trump’s first weeks have seen a whirlwind of activity. Some controversial and sparking international backlash, and some positive. While his term thus far dominates daily headlines, there continues to be other global factors at play with the potential to impact markets. The UK Supreme Court ruling that an Act of Parliament is required to proceed with Brexit may limit the government’s ability to ram through a ‘hard Brexit’, which would likely be good news for UK businesses (particularly financial services). UK Parliament are working through this curveball now with hopes for a quick resolution.

The Week Ahead

  • US: Federal Open Market Committee Rate Decision (FEB 01), ISM Manufacturing (JAN), Change in Non-farm Payrolls (JAN)
  • Australia: Trade Balance (Australian dollar) (DEC), Building Approvals (YoY) (DEC)
  • China: Manufacturing PMI (JAN)
  • Europe: Euro-Zone Gross Domestic Product (YoY), Consumer Price Index-Core (YoY) 
  • UK: Bank of England Inflation Report

Company News

  • German insurer Allianz is reportedly in informal talks about the potential acquisition of QBE Insurance.
  • Brambles fell 14% after it warned of lower-than-expected revenue and earnings growth as a result of lower pallet use in the US.
  • MacMahon Holdings rejected CIMIC Groups’ proposed $174 million takeover offer, saying it does not represent fair value of the business and urged its shareholders to take no action.
  • Resmed reported a 17% rise in sales to $US530.4 million for the second quarter of 2017, well ahead of analysts’ forecasts.
  • Alphabet (Google) beat revenue expectations in their end of fiscal year results, but net earnings were lower than expected. Reports focused on their move into the cloud space. 

 

Markets in Review

 

Capital Return

   
 

Weekly

CYTD

FYTD

S&P ASX 200

1.0%

0.9%

9.2%

DOW JONES

1.3%

1.7%

12.1%

S&P 500

1.0%

2.5%

9.3%

UK FTSE100

-0.2%

0.6%

10.5%

FRENCH CAC40

-0.2%

-0.5%

14.2%

GERMAN DAX

1.6%

2.9%

22.0%

JAPANESE NIKKEI

1.7%

1.8%

25.0%

SHANGHAI COMPOSITE INDEX

1.2%

1.8%

7.8%

 

ASX200 Sector Performance for the Week  

ASX200 Biggest Movers for the week 

$1 Australian buys you:

Security

LastPrice

AUDUSD

0.7520

AUDGBP

0.5999

AUDCNY

5.1718

AUDJPY

86.5895

AUDEUR

0.7052

AUDNZD

1.0386

 
 
Disclaimer
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.

Contact our experts


Other articles


 

Top of Page


 Back to News




IN THIS SECTION:


Rob Southwell

Sydney

Managing Partner and Partner – Private Clients Group


> View profile

John Brazzale

Melbourne

Partner and National Chairman


> View profile

Michael Minter

Newcastle

Managing Partner


> View profile

Bryan Hughes

Perth

Chairman


> View profile

Tom Verco

Adelaide

Managing Principal


> View profile

Ross Walker

Brisbane

> View profile



Partnership fraud

SUCCESS

Paperwork and independent advice saves partnerships from fraud

Discover more

Kia Ora Horse Stud

CASE STUDY

Pitcher Partners fills a Financial Manager gap to keep the business on track

Discover more

Fuel Injection Company Administration

LEADERSHIP

A fuel injection company began life as an Australian public company before being acquired by a UK publicly listed company while in the research and development stage of a “green...

Discover more



@PitcherPartner NEWS | Pitcher Partners expands services to meet clients’ changing needs, now listed 7th largest firm in the… https://t.co/i0JrNAdTl0