Financial markets this week A cut in the official Chinese interest rate provided some positive support for equity markets this week. The US S&P 500 Index rose by 1.0% over the week to Thursday, the sixth consecutive weekly increase. Locally, equities were also stronger with the S&P ASX 200 Index climbing 1.6%. However, the lower Chinese interest rates did little to stem the fall in iron ore prices, which reached new cyclical lows this week. The weaker iron ore prices may have contributed to the decline in the A$, which fell US 0.8 cents to US 85.5 cents. Lower domestic bond yields may have also played a role in lowering the demand for the A$. The Australian 5-year government bond yield now stands at 2.62% after dropping 0.15% this week. This follows a 0.08% fall in the previous week. The equivalent 5-year yield in the US is 1.56%, down 0.07% for the week. Capital expenditure data for the Australian economy in the September quarter was slightly better than market expectations. Investment spending by the private sector was 0.2% higher over the 3 month period. The data also suggested that firms are forecasting capital expenditure growth to take place in the non-mining sectors over the remainder of 2014/15.
Posted on: Mon, 01 Dec 2014 03:02:45 +0000
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