Key Data for the Week
Key economic data released this week:
Australian equities shrugged off a mixed offshore lead to finish in positive territory yesterday, with strength from Materials and Energy stocks offsetting a tough day for Health Care names.
Materials stocks continued to benefit from higher iron ore prices, as Fortescue Metals gained 5.9%, while Rio Tinto and BHP climbed 2.4% and 2.0% respectively.
Oil prices rose to their highest level since May, on a combination of weaker than expected output from the US, and the overhang of potential sanctions against Venezuela. Among Energy names, Woodside Petroleum closed 1.14% higher, while Origin Energy and Santos Limited rose 0.87% and 0.59% respectively.
The Australian futures market points to a 0.02% fall today.
US sharemarkets were mixed on Monday. The ongoing strength in Boeing shares continued to lift the Dow Jones, however selling in Facebook and Alphabet stocks weighed on the Technology sector. Snap shares closed 1.01% lower, as some investors were allowed to sell shares for the first time since the Snapchat owner’s March IPO. The Dow Jones rose 0.3% to hit a record closing high, while the S&P 500 and Nasdaq lost 0.1% and 0.4% respectively.
European sharemarkets were mostly weaker on Monday. Broker downgrades hurt consumer stocks, while tobacco stocks continued to fall, a day after the US Food and Drug Administration said it planned to cut nicotine in cigarettes.
Europe's largest bank, HSBC Holdings, reported earnings that beat estimates in the first half of 2017 and announced a US$2 billion share buyback. The bank said its pre-tax profit for the first half of 2017 came in at US$10.24 billion, 5% higher than a year ago, and beating the US$9.5 billion average estimate by analysts. The bank’s stock jumped 1.80% in London trade.
The Euro STOXX 600 and German DAX fell 0.1% and 0.4% respectively, while the UK FTSE 100 was the exception among European indices, climbing 0.1%.
There are a number of factors behind the weaker USD, but one factor that is growing in importance is the declining confidence in the new US government.
When Trump was elected in November last year, the USD rallied on the back of belief that Trump's expansionary policies would drive the US economy further.
However, some nine months later, with little or no meaningful policy legislated and continual controversy surrounding the government, confidence is waning.
Foreign exchange rates are relative to each other and reflect the varying levels of demand between currencies.
What drives the demand is investor belief in the economic growth of a country.
At the moment, the Trump government is hardly inspiring demand and the USD reflects this.
Should you wish to discuss this or any other investment related matter, please contact our Investment Services Team on (02) 4927 8844.
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