The week in finance - 11.01.2019

Published: Friday, January 11, 2019


Words by Paul Rickard

Five up days in a row on Wall Street supported the continuing recovery of the Australian share market. By the close on Friday, it had enjoyed its best week in months to post a net gain of 155 points or 2.8%, finishing at 5775.

Progress on the trade spat between the USA and China led to gains across the board. The resources sectors fared best, as the oil price rallied back over US$50 per barrel and base metal prices firmed. Woodside rose by 4.2% to $33.26, while iron ore major Rio added $2.82  to $79.65 . BHP also rose, although a change in trading status as it went ex an entitlement to a special dividend of $1.42 per share meant it recorded a nominal loss.

The major banks also rose. ANZ was the best adding 4.1% to $25.24, while NAB and Westpac each added around 2.3%. Commonwealth Bank, which had performed strongly in the sell-off in December, posted a small loss. 

With the holiday season in full swing, company news was fairly light. Treasury Wine Estates confirmed that “it is happy with its trading performance across all operating regions”, fruit and vegetable grower Costa warned that it had experienced “subdued demand” for tomatoes, berries and avocados during December and its shares got slammed (down almost 35% over the week), while specialty retailer Noni B said that it had enjoyed “strong Christmas trading”. 

Economic data was mixed, with Australia recording another trade surplus of $1.9bn in November, while building approvals dipped by 9.1% mainly due to a big fall in approvals for new apartments. The closely watched barometer for consumer activity and confidence, retail turnover, rose by a better than expected 0.4% in November.

Against a weaker US dollar, the aussie dollar rose by more than a full cent to close back over 72 US cents. If finished marginally higher against the Euro.  

Brickbats and Bouquets

Vested interest rose to the surface with the predictable “poo poohing” of the Productivity Commission’s report into superannuation. Fearing accountability and an end to the gravy train of default super, the industry funds joined with the ALP, the Unions and some retail funds to slam the central recommendation to provide first time workers with a list of  the “top 10” funds as picked by an expert panel. While there are some issues to be worked through in regard to the selection criteria, it is a better solution than the current default arrangements and would be a win for workers and consumers. A bouquet to BT who stood up and supported the recommendations – brickbats to all the other vested interest groups and Bill Shorten’s ALP team.

Speaking of Bill Shorten, he is only months way from becoming Australia’s 31st Prime Minister. He is set to hit millions of middle class Australians with 6 big tax slugs. You can read my analysis here. http://www.switzer.com.au/the-experts/paul-rickard/shortens-6-big-tax-slugs-to-hit-aussie-middle-class/

That’s the week.



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