A quieter start to this week for share markets – no French election fall out, no sell off in oil, no changes to media laws and no Federal budget and its tax on banks. But the increasingly erratic Donald Trump is still with us, as are doubts about the health of retailing in Australia and the US as well as concerns about housing, wages and earnings downgrades (here).
That was after we saw US share markets hit a new record high, but end the week down 0.4%. Eurozone shares fell 0.5% thanks to profit taking after the French election. Australian shares were flat in the wake of the budget and the bank tax.
Surprisingly, Chinese shares rose 0.1% despite more selling pressure as Chinese regulators attempt to bring unchecked shadow bank lending under control. And Japanese shares jumped a solid 2.3%.
Bond yields generally fell slightly in major countries despite good economic data and commodity prices were mixed with oil up (on lower US stockpiles) but copper and iron ore were down. The latter and a rise in the $US dropped the Australian dollar to well under 74 US cents.
As a result our market will start with a small gain, but will really be a lineball opening. Local investors will have to deal with the iron ore price dipping under $US60 a tonne on Friday to $US59.50 a tonne, down 25% so far this year. And coking coal is now down 25% as well at $US170 a tonne as supply problems in late March caused by Cyclone Debbie ease.
In New York, the S&P 500 and Dow notched up their first weekly falls in four after department stores posted another disappointing quarter’s figures.
Despite hitting a fresh record high earlier in the week, a 0.2% fall in the S&P 500 on Friday took the benchmark index’s weekly decline to 0.4% to close at 2,390.90.
And the Dow Jones ended the day down 0.1% and the week off half a per cent at 20,894.76.
The Nasdaq Composite ended Friday up 0.1% and rose 0.3% over the past five trading days to finish the week at 6,121.23 and its fourth straight weekly gain. The sector shrugged off weak trading sessions for the Dow and @&P 500 and recorded small daily rises for much of the week.
The department-store sector was punished with stocks and bonds taking a hit after Macy’s said its sales slump has extended into a third year.
But rivals such as Nordstrom, Kohl’s Dillard’s and JC Penney also posted weak results.
In Australia the ASX ended slightly higher over the week. The ASX 200 Index and the broader All Ordinaries Index both fell 0.7% on Friday to 5836.9 points and 5870.9 points, respectively. Over the week, the ASX 200 and the All Ords finished flat, climbing a fraction of a point.
Banks were hit by the tax and continuing investor unease about trading performances. The Commonwealth Bank of Australia lost 3.2% for the week ending at $81.67.
Westpac fell 3.8% to $32.57 and the ANZ (the big loser up to the budget, down 13% in a week) was off 4.7% to $29.22. The National Australia Bank lost 0.6% to $32.33 despite being, with Westpac, seen as vulnerable to the impact of the tax.
Insurers enjoyed a lift as a result with QBE up 3.6%, IAG rose 1.7% and Suncorp added 1.5%.
Myer was one of the worst performers losing 14.5% and the distaste for retailers spilled over to JB Hi-Fi, which closed down 6.9% and Harvey Norman, 8.3% as two negative analyst reports hit home.
And Slater & Gordon enjoyed a 19.3% jump in price on Friday after the embattled law firm announced its plans to file a claim against Watchstone Group in the High Court of England and Wales for approximately £600 million. Watchstone had sold Slater and Gordon the Quindell legal services business which has sunk S&G and forced it to the edge of collapse.
