RBA Govenor Philip Lowe's speech sends AUD into a tailspin; Australia's biggest private land developer says defaults on house and land packages in Melbourne are at 25%; and the Chinese economy is being pulled in two conflicting directions, so just how bad is the slowdown? Here's what's happening in markets today.
What I'm reading
Aussie Dollar takes a dive on RBA speech
The AUD/USD fell nearly 2% yesterday following Governor Phillip Lowe's first speech of the year. Lowe's speech acknowledged that the outlook for the economy was balanced between various scenarios that could see them either cut or raise rates from here.
Slowdown in construction market has developer worried
AFR Rich Lister and head of Australia's largest private land developer, Nigel Satterley, says default rates on house and land packages in Melbourne are in the range of 20 to 25 percent.
Chinese economy being pulled in two directions
Consumer spending remains strong in China in the face of major downgrades from global companies with large Chinese businesses and profit warnings from hundreds of Chinese companies. So just how bad is the Chinese economy right now?
Stocks to watch
- Pushpay (PPH) announced quarterly results with revenue up more than 35%, the company is now cashflow positive.
- AGL Energy's (AGL) half yearly results showed statuatory profits down by 52.9%, but underlying profit up 10.3%
- Downer EDI's (DOW) half yearly result showed a huge turnaround from last year's abysmal result. EPS went from -2.6c last year to 21.7c in this year's result.
- Similarly, Spotless Group (SPO) saw a turnaround from an EPS of -3.6c last year to 3.5c this year, while net debt fell by 12.9%.
- Mirvac Group (MGR) also saw a big improvement on last year. Revenue up 59%, and profit attributable to securityholders up 39%.
- New Zealand-based stocks on the ASX could be affected by the unexpectedly poor unemployment figures released this morning.
Key market data
- ASX Futures: 6,002.5 (+0.33%)
- AUD/USD: 0.7110 (-1.72%)
- ASX200: 6,026.10 (+0.34%)
- S&P 500: 2,731.61 (-0.22%)
- China A50: 11,496.77 (+0.61%)
- Australia 2-yr bond: 1.749 (-5.87%)
- Australia 10-yr bond: 2.148 (-4.28%)
- US 2-yr bond: 2.528 (unchanged)
- US 10-yr bond: 2.700 (-0.15%)
- Gold (USD/oz): 1,310.50 (-0.66%)
- Copper (USD/lb): 2.824 (+0.25%)
- Brent Oil (USD/bbl): 62.55 (+0.92%)
- 62% Iron Ore (USD/t): 69.15 (Chinese market still closed)
Upcoming data and events
- The RBA's Monetary Policy Statement is released tomorrow
- Australian Home Loans data, plus business and consumer confidence readings, are all due next week.
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