Key Data for the Week
Key economic data released this week:
Australian shares strengthened on Monday, led higher by the major banks, while firmer commodity prices helped boost the Materials sector. However, it was the IT sector that improved the most, rising 2.4%, as a takeover of Aconex boosted the sector.
Aconex (ACX) shares soared 44.2%, to $7.63, after US technology giant Oracle offered to buy the construction software provider for $7.80 per share, valuing the company at $1.6 billion.
ANZ was the best performer of the major banks, surging 2.1% to $28.82, after announcing it will complete an on market share buyback of $1.5 billion, after selling its life insurance unit, its wealth business and a 20% stake in Shanghai Rural Commercial Bank.
The Australian futures market points to a 0.48% rise today, being driven by broadly stronger international markets.
The S&P 500 and NASDAQ hit new highs on Monday, as investors focused on the progress of the proposed tax legislation. The tax bill, which will reduce corporate and individual tax rates, is expected to be voted on by the House of Representatives tonight and the Senate later this week, with intentions for it to be signed off prior to Christmas.
Financial stocks, unsurprisingly, were among the biggest improvers on Monday. Citigroup, Bank of America and Wells Fargo each rose more than 1%.
Shares in social media company Twitter, jumped 11.0% after JPMorgan announced it expects the company to post double digit daily average user growth of 10% in 2018.
The Stoxx Europe 600 Index climbed 1.2%, its biggest gain in five months, as real estate, automakers and technology stocks led gains throughout the region. The German DAX gained 1.6% and UK’s FTSE 100 rose 0.6%.
It was a mixed bag of news in Australia’s Mid-Year Economic and Fiscal Outlook (MYEFO) released yesterday.
The budget deficit was revised to reflect a $5.8bn improvement, reflecting better business conditions which, in turn, have lifted the projected tax intake from companies.
However, the GDP estimate for 2017/18 was revised down to 2.50% from 2.75%, which reflects slower growth in household consumption. The downgrade to the forecast reflects expectations that wage growth and inflationary pressures will remain subdued.
Interestingly, the forecasts were based on Australia maintaining its AAA credit rating. This time last year, speculation was growing about the possibility of a ratings downgrade from the major credit rating agencies, after Standard & Poor’s placed Australia on negative watch in July 2016, but left the AAA rating unchanged.
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