The chance of a trade deal between US and China before deadline for increases in tariffs seems to be slipping away as Trump says he won't meet with Xi Jinping again before March 2; the AiG housing construction index stayed deep in negative territory for January, indicating a continued slump in construction; and reports that Australia could become uninsurable as temperatures continue to rise. Here's what's happening in markets today.
What I'm reading
Construction slump continues, employment worsens
The AIG/HIA Performance of Construction Index (PCI) was released yesterday. The overall reading (43.1 - levels below 50 indicate contraction) was slightly up on last month, though still deeply negative. Of particular interest was the sharp drop in the Employment Indicator, which went from 50.5 (expanding) to 44.4 (contracting). Construction is one of the largest industries for employment in Australia, accounting for over 10% of total employment.
Trade deal looks increasingly unlikely
Trump's top economic advisor said yesterday that there was a "pretty sizeable distance" to go before a trade deal could be reached between the US and China. Trump later said that he would not meet with President Xi Jinping before the March 2 deadline.
Australia: The uninsurable country?
As Tasmania burns and Queensland floods, Richie Merzian, director of the Climate and Energy Program at the Australia Institute says there's a real risk that large swathes of Australia could be uninsurable if warming hits 3 or 4 degrees above pre-industrial levels.
Stocks to watch
- REA Group (REA) will take a $173 million impairment charge against the carrying value of their Asian segment, reducing statuatory profit by 98% against the prior corresponding period (pcp). The underlying result remained strong with operating profits up 20%, and revenue up 15%.
- Growth in subscription video services and book publishing more than offset declines in news and information services for News Corp (NWS), resulting in a 13% increase in segment EBITDA compared to pcp.
Key market data
- ASX Futures: 6,006.0 (-0.13%)
- AUD/USD: 0.7100 (-0.05%)
- ASX200: 6,092.50 (+1.10%)
- S&P 500: 2,706.05 (-0.94%)
- China A50: 11,496.77 (+0.61%)
- Australia 2-yr bond: 1.735 (-2.91%)
- Australia 10-yr bond: 2.097 (-3.90%)
- US 2-yr bond: 2.484 (-1.76%)
- US 10-yr bond: 2.657 (-1.59%)
- Gold (USD/oz): 1,313.75 (-0.05%)
- Copper (USD/lb): 2.831 (-0.21%)
- Brent Oil (USD/bbl): 61.70 (-1.58%)
- 62% Iron Ore (USD/t): 69.15 (unchanged - expect a large move to the upside when Chinese markets reopen on Monday)
Upcoming releases and events
- The RBA's Statement on Monetary Policy is due at 11:30am today
- On Tuesday, home and investment lending data, plus NAB's business confidence survey are released.
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