St George Economics economy and finance update

SHARE Markets:

Another night of limited economic news saw a further session of flat markets. The market may have been waiting for US Fed Chairman Bernanke's speech on monetary policy later this morning. 

The FTSE100 fell 0.2% and the Dax was up 0.2% while in the US the Dow rose 0.2% and the S&P500 fell 0.2%. 

Bonds:

Bond markets were similarly lacklustre. US ten year bond yields fell just one basis point to 1.87% while German long bond yields fell three basis points to 1.55% on soft economic data (see below).

Foreign Exchange:

The AUD moved a touch higher overnight as the USD also slipped lower against the euro. Comments by a US Fed member that quantitative easing (QE) may go on for longer than some have recently suggested appeared to add to USD weakness.

Commodities:

The thought of extended US QE pushed gold a few dollars higher and oil lifted marginally on the softer USD.

Australia:

Housing finance figures were soft with a 0.5% decline in the number of home loans in November.  Excluding refinancing, the number of loans fell 1.3%. 

On a brighter note, the value of loans made rose 0.6%, a fourth consecutive month of increases. The ANZ job ads series fell 3.8% in December, the ten consecutive month of decline.

The TD Securities - Melbourne Institute monthly inflation gauge rose 0.4% in December to be up 2.4% over the year.

Europe:

Industrial production in the eurozone fell 0.3% in November following a 1.0% decline in October suggesting a contraction for Q4, 2012.

The ECB estimates that the Eurozone economy contracted 0.5% in 2012 and forecasts a further contraction of 0.3% in 2013.

United Kingdom:

A Bank of England financial policy committee has proposed that British banks offering large home loans that risk fuelling a future housing boom will have to hold extra capital to keep the financial system safe.

United States:

No data released, however, members of the US Federal Reserve were putting forward conflicting views on the longevity of the Fed's QE programme.

Moderate Lockhart said that QE4 is not without bound, while 'dove' Williams countered saying that any exit from the stimulus program is several years away given economic projections.

The market is waiting to see what Fed Chairman Bernanke believes.

Today's key data and events

  • UK PPI Inputs Dec prev 0.1% (8:30pm)
  • UK PPI Outputs Dec prev -0.2% (8.30pm)
  • UK CPI Dec prev 0.2% (8.30pm)
  • EZ Trade Balance Nov prev €7.9bn (9pm)
  • US Empire Mfg Jan prev -8.1 (12.30am)
  • US Retail Sales Dec prev 0.3% (12.30am)
  • US Producer Prices Dec prev -0.8% (12.30am)

The information contained in this report ("the Information") is provided for, and is only to be used by, persons in Australia. The information may not comply with the laws of another jurisdiction. The Information is general in nature and does not take into account the particular investment objectives or financial situation of any potential reader. It does not constitute, and should not be relied on as, financial or investment advice or recommendations (expressed or implied) and is not an invitation to take up securities or other financial products or services. No decision should be made on the basis of the Information without first seeking expert financial advice. For persons with whom St.George has a contract to supply Information, the supply of the Information is made under that contract and St.George's agreed terms of supply apply. St.George does not represent or guarantee that the Information is accurate or free from errors or omissions and St.George disclaims any duty of care in relation to the Information and liability for any reliance on investment decisions made using the Information. The Information is subject to change. Terms, conditions and any fees apply to St.George products and details are available. St.George or its officers, agents or employees (including persons involved in preparation of the Information) may have financial interests in the markets discussed in the Information. St.George owns copyright in the information unless otherwise indicated. The Information should not be reproduced, distributed, linked or transmitted without the written consent of St.George.



End of an era: Ballina's best-loved home on the market

premium_icon End of an era: Ballina's best-loved home on the market

Retro 50s beach house in prime beach location

When will the Ballina waterslides open?

premium_icon When will the Ballina waterslides open?

The temperatures are heating up and the slides look pretty inviting

'ICON GONE': Beloved pub shuts its doors

premium_icon 'ICON GONE': Beloved pub shuts its doors

Owners say the decision was made with "a heavy heart”

Local Partners