Investment Week in Review - 7 August 2017

By Marcus Damen - August 7, 2017

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

Comment

President Trump took credit last week for July’s ‘Excellent jobs numbers’ by stating that he has ‘only just begun’ which is an interesting statement for a few reasons.  Firstly, the jobs figures (while reasonable) continue to average a lower monthly gain than what has already been the case for the past few years (according to the Bureau of Labour Statistics data below):  

Secondly, the sectors that Trump has been most vocally pledging to revive (ie manufacturing, mining and construction) actually experienced flat jobs growth for the month, with all of the growth instead being in the services sectors.  

Trump’s tweets last week also suggest that he is taking the credit for the US stock market reaching an all-time high.   This is also an interesting assertion given that a majority of this year’s growth in the US market has been from the IT sector (which includes the large multinationals that are arguably the most at risk from Trump’s protectionist/anti-globalisation policies) and Healthcare (the sector in which Trump has so far been unsuccessful in implementing his agenda).   For the calendar year to date, over 40% of the return from the S&P 500 has been from the IT sector (driven largely by Apple, Amazon, Facebook, Google and Microsoft) and almost 20% has come from the Health Care sector. 

News in Review 

Australia

  • As largely expected the RBA board left the cash rate unchanged at 1.50%.
  • Total retail sales in June were 3.8% higher than 12 months earlier and 0.3% higher over the month (vs expectations of +0.2%), the third consecutive month of positive growth.
  • Australia’s trade balance on goods and services decreased by $1,168m to a surplus of $856m in seasonally adjust terms. The difference was led by a rise in imports and services with capital goods alone rising $733m in seasonally adjusted terms.

US

  • The US reported strong jobs growth in July, helped by a wave of hiring in the hospitality industry.  The Bureau of Labor Statistics said 209,000 jobs were created in July, which was more had been expected.   The unemployment rate edged lower to 4.3%, matching May's figure which was the lowest since 2001.

UK/Europe

  • The Bank of England voted 6-2 to keep interest rates at a record low of 0.25pc on Thursday.  Ben Broadbent, the Bank's deputy governor, said "there may be some possibility" for interest rates to move marginally higher, as he stressed that borrowing costs could rise more times than the financial markets expect.

The Week Ahead

  • Australia: ANZ Job Advertisements, NAB Business Confidence/Conditions
  • US: July Consumer Price Index
  • Europe/UK: July Consumer Price Index – Germany  
  • China: July Consumer Price Index and Producer Price Index

Company News

  • The primary news for the week was that Australian Transactions Reports & Analysis Centre (AUSTRAC) accused Commonwealth Bank of ‘serious and systematic’ breaches in anti-money laundering and counter terrorism funding laws. AUSTRAC has stated that CBA failed to take necessary steps to prevent money laundering through the use of their Intelligent Deposit Machine’s and did not report transactions over $10,000 to AUSTRAC quick enough. AUSTRAC has brought forward 53,700 in total, each with a maximum penalty of $18 million.

Markets in Review

 

Capital Return

   
 

Weekly

CYTD

FYTD

S&P ASX 200

0.3%

1.0%

0.0%

DOW JONES

1.2%

11.8%

3.5%

S&P 500

0.2%

10.6%

2.2%

UK FTSE100

1.9%

5.2%

2.7%

FRENCH CAC40

1.4%

7.0%

1.6%

GERMAN DAX

1.1%

7.1%

-0.2%

JAPANESE NIKKEI

0.0%

4.4%

-0.4%

SHANGHAI COMPOSITE INDEX

0.3%

5.1%

2.2%

ASX200 Biggest Movers for the Week

$1 Australian buys you:

Security

Last Price

AUDUSD

0.7967

AUDGBP

0.6063

AUDCNY

5.3533

AUDJPY

87.6890

AUDEUR

0.6705

AUDNZD

1.0718

ASX200 Sector Performance for the Week


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