Sadly, this week the papers have been dominated by the Lara Bingle and Michael Clark fiasco. However, other things have been happening.
After much digging around, and getting past pictures and celebrity hanger’s on quotes, I’ve dug up some much needed to know financial information for you this week.
Centrebet, an online gambling service in Australia, will now be offering the chance to ‘bet’ on where the ASX 200 ends the month. So just in case you can’t get enough of betting on boxing, the dogs, the horses, elections or even interest rate decisions, you can now take a punt on the stock market.
But, it appears that the Eurozone countries don’t like the idea of gambling on the markets. And want to take matters into their own hands.
The European Commission are seeking to establish something similar to the International Monetary Fund, potentially becoming the European Monetary Fund (EMF). Details are still being developed, however the idea is the EMF will co-ordinate with the European Central Bank on fiscal policy for Eurozone countries.
The commission says it wants to act as a preventative as well as a corrective measure, to prevent catastrophic levels of public debt by Eurozone members. Basically, the proposed EMF will ‘step in’ and bailout countries, like Greece, and assist in managing sovereign debt.
You can’t help but feel that this would become a back up money pit for poorly managed countries.
Putting sovereign debt aside, Tony Abbott the Opposition Leader, wants to give women 26 weeks paid maternity leave. This makes Prime Minister’s Kevin Rudd’s plan embarrassing in comparison.
The best – or worst – part of Mr. Abbott’s plan, is that he would match the salary of the women taking leave, up to $150,000 for an annual salary, instead of Mr. Rudd’s plan of the minimum wage for 18 weeks.
Abbott’s plan is expensive, and large companies would be expected to foot the bill. Only companies with a taxable income of over $5 million per year would be charge a levy of 1.7%. Currently, Rudd’s plan would see no extra taxes or penalties introduced.
This proposal reeks of a publicity stunt in a desperate bid to get female voters on board, without taking into account the financial implications.
Think about it, if companies are going to be slugged with yet another tax, they’ll try to pass this increase onto the consumer, or more likely it will cost jobs. This means you’re paying for someone on a high salary to stay home for six months.
And not only are you’re daily costs going to increase, but the cost of housing is going up, again.
The Reserve Bank of Australia (RBA) has warned of higher house prices. This ‘warning’ comes after a drop of 7.9% home lending for February, potential further interest rate rises and the First Home Owners Grant begin wound back.
Normally those three ingredients the RBA has suggested would be a recipe to ease housing prices.
But thanks to easier access to unlock the ‘equity’ in your home, and the government easing restrictions on international buyers of Australian property, there’s no foreseeable end to the artificial demand for Australian housing.
It’s almost like the government finally worked out that our banks trillion dollar exposure to the Aussie market would be disastrous if it all fell over. Could they be using foreign investment as a way of propping up housing prices?
To end the week, there’s nothing like a stimulus package to keep things running along.
Australia has experienced what could almost be called an artificial job boom of the recent months. The rapid growth in jobs has been attributed to stimulus spending rather than real economy growth.
This is odd, as the RBA have been using the labour market to justify the increases of interest rate rises.
“…the benefit of fiscal stimulus has shifted to construction and away from the direct boost to consumer spending.”
That’s according to Mr. Meer, a chief economist at Deutsche Bank.
And this shift away from consumer spending jobs, mainly the retail sector, has seen more females out of work than males.
On to today’s wrap-up…
The S&P/ASX 200 ended the day 5 points down to 4,814.20. The labour data released yesterday, showing unemployment rose to 5.3%, however this was in line with what economists were expecting.
The real news that drove the Aussie market into the red was China’s inflation figures.
Investors are still concerned that China’s economy is overheating after key figures were released. The consumer price index (CPI) in China was up 2.7%.
It’s no secret that Australia’s survival of the ‘GFC’ has been as a result of China consuming our resources. A slowing down in China will affect the Australian market.
The Dow Jones Industrial Average gained 44 points overnight, closing to 10,611.84. Banking stocks lead the way, boosted by the news that the proposed banking regulations won’t be as strict as initially thought. But the details have not been released yet.
The US, are still looking for signs that the economic turmoil is easing. Data released yesterday showed the trade deficit narrowed in January and that jobless claims were lower than expected.
Over in the UK, the FTSE was down 23 points to 5,617.26. Both the miners and banking stocks dragged the index into the red for the day.
Richard Hunter, head of UK Equities at Hargreaves Lansdown said yesterday “We seem to have run out of breath at this stage,” when asked about the current UK financial markets.
“We’re now inching towards the Easter break and we’re probably six to eight weeks away from the next quarterly reporting season. In the absence of any major news, we could well see the market drifting for a little while yet.” Mr. Hunter said.
The Nikkei was higher by 101 points (0.96%), ending the session at 10,664.95.
The price of spot gold in Australian dollars is trading at $1,212.01 while in US Dollars it is trading at $1,109.49. The price of silver in Aussie dollars is $18.73 and in US Dollars it is $17.15.
The Aussie dollar versus the US dollar was up a few pips overnight to USD$0.9154, and slightly higher against the Japanese Yen JPY82.85
The price of Crude Oil overnight did very little. If China tightens monetary policy further, this could see the price of oil drop. China is currently the world’s second largest energy consumer. Read more here.
Crude Oil was higher overnight, up by 0.28% to close at USD$82.32
For the biggest movers on the market yesterday click here…
That’s the end of another week. Have a great weekend.
Shae.
{ 8 comments… read them below or add one }
Shae, your articles are getting more and more interesting. Keep going and in a couple of months demand a pay rise. Sayce can take a cut, for the sake of equality.
Cheers and good weekend!
but SV that will make him more competitive in the market.
about time
So concise, I’m impressed SV.
lol, now there is a curved one for Sayce to figure out. Will he take a pay cut to be more competitive, or will he cut instead someone else’s pay? Now, let me guess why he is harping on about abolishing the minimum wage ………… hmm…….. You gotta wonder how safe Shae’s wage would be, don’t ya?
I probably read too much money morning (can’t go without my daily fix) but can’t understand what’s wrong with Abbott’s proposal, apart from him focusing on large companies. The way I see it:
1) people want paid maternity leave. Not just women, but their husbands, too.
2) money has to come from somewhere. You can add it to companies payroll tax, profit tax, individual’s income tax etc, or you can reduce other budget expense. (FHOG, negative gearing, business R&D grant, health – take your pick)
3) in reality, no one wants to pick the tab. Ppl just want to just get it, as their free lunch.
MM taught me there are no free lunches. So, question: what possible proposal could be better (except to spread the tax between all businesses and people)? At least Abbot’s shows it costs money.
Nothing wrong with the proposal, if you asked me, SV. Abbott has let the cat amongst the pigeons, too, putting Labor into the unenviable position of having to argue against the interests of the majority, not to mention the female vote, at that.
Plus, he is calling it correctly. The largest earners will not be put in the sewer because of a little more tax on their profits, and it is about time that there were genuine incentives to young families of this country to go forth and multiply.
But let’s see whether big business and vested interests can convince the people to vote against their own pocket. With MSM on side, you never know, so it will be a fascinating show, but my guess is that this is where the limitations of spin will really start showing up. About time, too.
Good article Shae.
So Australians are the heaviest indebted nation on earth! Not only due to the most overpriced property on earth, but also because of their “sh!t for brains” mentality regarding buying everything on credit!
Boy – when the housing market crashes it’s going to make America’s crash look tame by comparison…