News

The Australian stock market was one of the worst performing in major markets. The ASX200 shed almost 3%, with the Banking sector bearing most of the weight. Putting it in context, if you excluded the Banks, Aussie stocks would have risen 0.3%. Banks sold off almost 10% in partial response to the new Bank Levy hidden in the 2017 Budget, as well as ANZ, NAB, & WBC all going ex-dividend and paying hefty dividends. It should be noted the sector actually added nearly 30% to the end of April, so one could argue there was potentially some profit taking in the mix. The Banks are now trading at PEs of around 12.8x, which is more in line with long term averages (12.1x). Around the world, UK markets did well, lifting almost 5%. On a 12mth basis, UK markets are now up 25%... but that performance can mostly be explained the low start base (BREXIT vote last year). Iron ore prices fell $9.50/t to $58. Oil was a fraction weaker at $50/b. The RBA left cash rates unchanged, and longer term interest rates drifted lower.

Yesterday was not all about the Budget. An important piece of domestic data came out which (to my mind) highlighted the precarious nature of our economy.

When you consider Apple makes $560 in profit per iPhone 7 sold, it’s hard to imagine the stock selling off on their reported results. This week Apple reported 3rd Quarter revenues of a whopping $44.5 billion. But investors were expecting an extra $1.2billion… so they sold the stock nearly 2% lower. Here are a few other things their result revealed…

Stock markets were reasonably stable in the early part of the month but then weakened as geopolitical tensions increased, US economic activity was softer, and French Presidential elections surprised. However once French elections seemed more certain and US companies reported positive earnings, markets rallied. European stocks lifted as the prospect of a Eurozone breakup diminished.

The humble washing machine is fast becoming an important marker in the Chinese economy. With China being the second largest economy in the world, and Australia’s major trading partner, any forward insight into economic health can be a game changer for many.