ASX200 up 31 points in mid morning trade, after rebound in in’l markets. Energy and Materials on top, defensives lag. Italian risk eases, oil production cuts remain. First day for URW (nee WFD) CAPEX data later today #ausbiz



  • Westfield (WFD) to be now known as Unibail-Rodamco SE (URW)
  • Ex-dividend – CSR 13.5c, Oceania Capital Partners (OCP) 3.0c, Orica (ORI) 20.0c, Restaurant Brands NZ (RBD) 17.0c, Ruralco Holdings (RHL) 9.0c, Technology One (TNE) 2.9c
  • Economic data – Private Capital Expenditure, Private Sector Credit


  • China – NBS Manufacturing PMI, Non Manufacturing PMI
  • Japanese data – Industrial Production, Construction Orders, Housing Starts


  • European data – Inflation Rate Flash  and Unemployment Rate
  • UK data – Nationwide Housing Prices, BoE Consumer Credit
  • US economic data – Personal Income, Personal Spending, PCE Prices, Chicago PMI, Pending Home Sales
  • Fed Speak – Atlanta Fed President (FOMC voter) Raphael Bostic, Governor Lael Brainard (FOMC voter)

BUILDING PERMITS YESTERDAY – Residential building approvals fell 5% in April, worse than the 3% expected, but the prior month was revised up from 2.6% growth to 3.5% growth. It was driven by a 11.5% decrease in private sector dwellings excluding houses. The value of residential building fell 0.5% and has fallen for three months. The value of non-residential building fell 1.0% and has fallen for eight months.

State trends

  • NEW SOUTH WALES: Total residential approvals +0.9% in April. Private sector houses + 0.6% in April and has risen for six months.
  • VICTORIA: Total residential approvals -2.3% in April. Private sector houses +1.5% in April and has risen for 15 months.
  • QUEENSLAND: Total residential approvals +0.7% in April. Private sector houses +1.6% in April and has risen for four months.
  • SOUTH AUSTRALIA: Total residential approvals +1.7% in April. Private sector houses fell 0.4% in April and has fallen for six months.
  • WESTERN AUSTRALIA: Total residential approvals -2.2% in April. Private sector houses fell 0.9% in April and has fallen for 11 months.




US EQUITIES – S&P500 +34 (+1.27%), Dow Jones +306 (+1.26%), Nasdaq +66 (+0.89%).

Main themes

  • Recovery in stocks as political situation in Italy eases
  • Energy sector outperforms on reports OPEC/Russian production cuts will be maintained.

EUROPEAN MARKETS – Mostly higher, with recover in Italy the highlight. STOXX 600 +0.27%, German DAX +0.93%, French CAC -0.20%. Italian MIB +2.09%


  • The US dollar sold off, closing 0.8% lower at 94.07.
  • The Aussie dollar is significantly higher at US75.78c.

BONDS – A move back in favour of peripheral European markets. 2-yr: +10 bps to 2.42%, 5-yr: +9 bps to 2.67%, 10-yr: +7 bps to 2.84%, 30-yr: +4 bps to 3.01%.

European bond markets rallied, with the Italian 10 bond yield down 29bp to 2.84%


  • WTI oil futures closed up $1.48% or 2.2% to US$68.21 a barrel on reports that OPEC and non-OPEC producers would keep production cuts in place until the end of the year. The Russian central bank also issued a statement saying a decline in oil prices would pose a risk to the country’s financial sector.
  • Gold futures were virtually unchanged at $1298.70.
  • Iron Ore – IRESS reports iron ore unchanged at US$65.00 a tonne. The CommSec site says China Import (Fines 62% Fe) was up US75c to US$64.00/dry ton. (CFR Tianjin port)
  • LME metals – All stronger except copper again. Cu -0.29%, Ni +1.51%, Al +0.17%4


  • US economic data – May ADP Employment Change 178K (consensus 183K; prior 163K); Q1 GDP – Second Estimate 2.2% (consensus 2.3%; prior 2.3%), Q1 GDP Deflator – Second Estimate 1.9% (consensus 2.0%; prior 2.0%), April Advance International Trade in Goods -$68.19bn (consensus -$70.70bn; prior -$68.59bn), and April Advance Wholesale Inventories 0% (prior 0.5%), Weekly MBA Mortgage Index -2.9% (prior -2.6%)
  • Fed Beige Book – Described the economy as expanding moderately. The report acknowledged the presence of higher manufacturing activity, but consumer spending was classified as ‘soft.’ The Beige Book also noted the presence of higher costs of basic materials.
  • Italian politics – The latest reports suggest that a snap election may be avoided. President Sergio Mattarella is considering a M5S-Lega government that would also include Paolo Savona serving in a capacity other than finance minister.
  • European economics – Eurozone May Business and Consumer Survey 112.5 (expected 112.1; last 112.7). May Industrial Sentiment8 (expected 6.7; last 7.3) and Services Sentiment 14.3 (expected 14.5; last 14.7); German May Unemployment Change -11,000 (expected -10,000; last -8,000) and May Unemployment Rate 5.2% (expected 5.3%; last 5.3%). April Retail Sales +2.3% (expected 0.5%; last -0.4%) to be +1.2%yoy (expected 1.3%; last 1.7%). April Import Price Index +0.6% month-over-month (expected 0.7%; last 0.0%); +0.6%yoy (expected 0.7%; last -0.1%); French Q1 GDP +0.2% (expected 0.3%; last 0.3%) to be +2.2%yoy (expected 2.1%; last 2.1%). April Consumer Spending -1.5% (expected 0.2%; last 0.2%)
  • Australia yesterday – Outperformed yesterday despite the falls. China 2.53%, Japan 1.52%, Kong Kong 1.40% and Singapore 1.94%.


“It is understandable that the Fed injects cash to avoid the collapse of the stock market, but basically it is bad policy for monetary authorities to intervene to save speculators from bankruptcy. This is not their role.” – Maurice Allais, French economist and winner of the 1988 Nobel Memorial Prize in Economic Science,  born this day in 1911. Died 9 October 2010.


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