Tuesday, September 2, 2014

Australian Equities Market

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THIS MORNING
The Australian sharemarket is flat following a quiet night overseas.
OVERNIGHT MARKETS

US Equities
US Sharemarket were closed on monday.

YESTERDAY’S MARKET
Local Markets Update.

Building Approvals Jump More Than Expected, ABS Data Shows

A RISE in home building approvals suggests the economy may be shifting away from its reliance on mining.

Approvals for the construction of new homes rose 2.5 per cent across Australia in July, official figures show, beating economists’ expectations of a 1.9 per cent rise.

The rise in July follows a dip in approvals in June.

Over the 12 months to July, building approvals were up 9.4 per cent, the Australian Bureau of Statistics said today.

A rise in single dwelling approvals as well as multi-unit approvals was a positive sign, as house building is more important for growth, JP Morgan economist Tom Kennedy said.

The latest figures suggest the economy is shifting toward non-mining sources of growth, he said.

“This one-off result doesn’t really move the needle much but it certainly is a move in the right direction,” Mr Kennedy said.

“It does suggest the rebalancing away from resource-related activity is continuing, like it did in the first half of the year.

“We do need to see more increases in the next few months.”

National Australia Bank senior economist Spiros Papadopoulos said apartment approvals in Western Australia drove the increase in total building approvals in the month.

“If we look at the underlying trend we’re still seeing softer building approvals coming through, but the overall level is still pretty solid at around 16,000 a month,” he said.

“So the level of approvals is still consistent with some pretty solid residential construction in the coming period.”

Mr Papadopoulos said housing construction would be a major contributor to overall economic growth in the coming months.

This news story is reprinted from www.theaustralian.com.au

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Economy To Suffer Temporary Setback

The Australian economy is expected to have hit a speed bump after going at break neck speed earlier in the year.

The economy is forecast to have grown by 0.4 per cent in the June quarter, and three per cent in the 2013/14 financial year, according to an AAP survey of 15 economists.

The expected slowdown follows a strong March quarter, when gross domestic product (GDP) grew at an annual rate of 3.5 per cent - the fastest in two years.

The Australian Bureau of Statistics will release the latest National Accounts figures on Wednesday.

A fall in the value of exports after a drop in commodity prices will be the major factor hindering economic growth, Commonwealth Bank chief economist Michael Blythe says.

After making a large contribution to growth of 1.4 percentage points in the first three months of the year, Mr Blythe is forecasting that the fall in exports in the June quarter could reduce growth by almost the same amount.

"The potential size of this swing has seen some commentatorsraise the possibility of an outright GDP contraction in the second quarter," he said.

"But such an outcome seems unlikely."

Mr Blythe said weak consumer confidence after the tough federal budget in May and its impact on retail spending will also have an impact.

Westpac chief economist Bill Evans said the Reserve Bank won't be concerned about an economic slow down though, especially after the strong growth early in the year.

He expects growth to strengthen later in 2014, helped by a lift in consumer spending.

"Strengthening balance sheets, booming housing construction, and rising confidence as the politicians reach an acceptable compromise over the budget will be key sources of the consumer spending boost," he said.

A Dun and Bradstreet survey released on Tuesday also indicated the economy should bounce back later in the year, as the retail sector drags itself out of the doldrums.

Forty per cent of business surveyed expect their profit in the final three months of 2014 to be higher than the same period a year ago, and more expect to hire staff.

Retailers were the most optimistic, indicating confidence in consumers spending big this Christmas.

Dun & Bradstreet's economic adviser Stephen Koukoulas said rising confidence could boost the economy.

"D&B's data suggest that the economy is poised to run at, or even above, trend levels in the second half of 2014, with expected employment and capital expenditure also well above the long run average."

This news story is reprinted from au.finance.yahoo.com

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Australian Banks Resist Global Tax Crackdown

Australian banks are stalling on a deal that will help expose tax evaders to global authorities.

The information sharing deal, part of the G20 talks in Australia this year, requires banks to pass on information about their customers to the Australian Tax Office.

The deal has been signed by more than 40 countries, including Britain, the US and tax havens such as the British Virgin Islands. Australia has signalled it will implement the deal but is refusing to make a firm commitment before consulting with business.

In a submission to the Treasury, the Financial Services Council, which represents the big four banks through their financial planning arms, said complying with the new rules would create significant costs to members, which would then be passed on to customers.

It called on the government to make some accounts exempt from the rules, such as trusts used to hold pension or super funds. This would bring it into line with the Foreign Account Tax Compliance Act with the US, it said.

AMP said it was "deeply concerned" about the costs involved in handing the information over, saying the new rule would bring "extremely limited benefit to Treasury".

It said the ATO already held a "great deal of information" about individuals and entities, which should be leveraged before banks were called upon.

"We believe it is likely to be far more cost effective for the ATO to collect more or more detailed information through existing systems, rather than ask financial institutions to ask questions of customers," it said.

Labor Treasury spokesman Chris Bowen said the opposition supported the G20's move to enhance the exchange of information between financial institutions and tax authorities to ensure companies pay their fair share of tax. While Labor noted financial institutions' concerns about a potential increase in regulatory burden, it would examine the government's legislation when it was brought forward.

"So far, this is a Treasurer and a government that talks tough on multinational tax avoidance but has delivered nought to-date," Mr Bowen said.

"There are clear benefits to the Australian community from increased compliance with Australian tax law and so any concerns regarding implementation costs will need to be weighed against these."

The common reporting standard on automatic exchange of information requires financial institutions to collect additional data on customers and disclose it to the Tax Office. It then sends this information on to authorities around the world in a bid to catch tax cheats.

The deal was endorsed by finance ministers at the G20 meeting in Sydney in February as part of a global crackdown on tax dodging.

Mark Zirnsak, a representative of the Tax Justice Network, said as well as costs, the banks had something to fear from losing customers that did not want greater scrutiny by the ATO.

This news story is reprinted from www.smh.com.au

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Monday, September 1, 2014

Australian Equities Market

THIS MORNING

In Australia, the Business Indicators publication is released with the RP Data Home Value index, TD Securities inflation gauge and Performance of Manufacturing index. In China the purchasing managers index is released. In the US, markets are closed for a public holiday.

OVERNIGHT MARKETS

US Equities

US sharemarkets ended modestly higher on Friday. Investors monitored both the situation in Ukraine and mixed economic data while they were wary about taking on new positions ahead of a holiday weekend. The Dow Jones index rose by 19 points or 0.1% with the S&P 500 index up by 0.3% to record highs while the Nasdaq lifted by 22.6 points or 0.5% to 14-year highs. Over the week the Dow gained 0.6% while the S&P 500 lifted by 0.7% and the Nasdaq gained 0.9%.

* US treasury prices were little changed on Friday ahead of a holiday weekend. US 2 year yields fell by 2 points to 0.492% while US 10 year yields were flat at 2.344%. Over the week US 2 year yields fell by 2.5 points while US 10 year yields fell by 4.5 points.

* Major currencies ended weaker against the US dollar after European and US sessions on Friday. The Euro fell from highs near US$1.3195 to around US$1.3130, before ending US trade at the day's lows. The Aussie dollar eased from highs near US93.60c to lows near US93.25c before ending the US session close to US93.35c. The Aussie is near US93.20c this morning. And the Japanese yen eased from 103.76 yen per US dollar to JPY104.10, ending US trade near JPY104.05.

* World oil prices rose on Friday on fears that Western nations may impose more sanctions on Russia. Brent crude rose by US73c or 0.7% to US$103.19 a barrel and the US Nymex price lifted by US$1.41 a barrel or 1.5% to US$95.96 a barrel. Over the week Brent rose by US90c a barrel or 0.9% while US Nymex gained US$2.31 or 2.5%.

* Base metal prices rose by up to 0.8% on Friday with nickel leading the way. But lead bucked the trend, down by 0.2%. Over the week, base metal prices were mixed with gains or losses not exceeding 1.4%. Gold prices fell on Friday with the Comex gold futures quote down by US$3.00 or 0.2% to US$1,287.40 per ounce. Over the week gold rose by US$7.20 an ounce or 0.6%. Iron ore rose by US60c or 0.7% on Friday to US$87.90 a tonne. But over the week iron ore fell by US$2.20.

YESTERDAY'S MARKET

Local Markets Update.

This news story is reprinted from www.businessspectator.com.au

Read more details on Australian Stock Market