Initial strong gains evaporated following US military strikes on a Syrian airbase, before an afternoon recovery left the ASX flat for the day and the week. For those that missed the particular of the Syria news and its impact on the market , here's a video to catch up:.
Gold and oil surge in reaction to US missile strikes on an air base in Syria. Vision courtesy ABC News Shares have managed somewhat surprisingly to end the day in the black, after late morning news of US airstrikes on Syria swung solid early gains into solid losses by early afternoon.
The ASX added 6 points for the day and was barely unmoved for the week at at the closing bell.
Profiting of Syria Attacks Tomorrow ALL IN Oil and Gold! : StockMarket
But over the week the big lenders were a major drag, as CBA and ANZ dropped 1. Lots of talk this week around increased regulation probably did little to help. Gold miners shone today as investors rushed to their arms in a traditional safety play amid geopolitical turmoil.
Both groups climbed today, as AGL added 2. Miners fell today, and it was a week of mixed fortunes. Among the worst performers was Metcash , which lost 8. But Vocus was the pits, plunging 12 per cent after investors booed the telco's announcement that it was going to build an underwater cable between Perth and Singapore. The residential mortgage loan books at Aussie banks are huge, but at least regulators are remaining vigilant in their efforts to monitor the sector.
That's the view of UBS in a research note called Housing Bubble Watch , which provided some historical perspective on the incredible growth of household mortgage debt in Australia. The bank also assessed statements made by APRA yesterday about fostering strength in the sector and raising capital ratio requirements for Aussie banks. UBS cited the Basel 1 Accord in as a key event which kick-started the upward spiral in mortgage debt. This chart shows the growth of household debt since then, and in the words of UBS "a picture tells a thousand words".
UBS said that, "from this time banks could l everage their mortgage books more significantly than other lending products, and allocated a greater proportion of their book to mortgages". The introduction of Basel 2 in allowed major banks to bring risk-weighting measurements in-house.
This saw the risk-weights for mortgages reduced to the "mid-teen levels". With lower capital requirements, risk weightings at those levels implied that banks could leverage mortgage assets at around 80 times the value of their loan book , UBS said. Read more at BI Australia. It was the expected response: Investors have also looked to the safety of bonds , pushing down yields, which move in the opposite direction to prices. Encouragingly, Wall St futures - not included in this chart - have recovered to trade only 0.
Seek shares have hit a seven-month high after the jobs portal finalised moves to privatise its successful Chinese jobs portal Zhaopin and delist it from the New York Stock Exchange. The website is the largest and most popular Chinese jobs portal, with about Seek, which currently owns The offer price represents a The euphoria that had lured investors back into commodities is showing signs of fatigue.
After cash poured into exchange-traded funds linked to raw materials earlier this year, inflows have plunged in recent weeks. Investors are focused on rising global inventories for everything from crude oil to soybeans, while Goldman says the pace of economic growth in China will drive raw-materials consumption. When things get into this range, we're neutral.
We're looking for some sort of movement one way or the other. The Bloomberg Commodity Index, which tracks returns for 22 components, has dipped about 4 per cent since this year's peak in mid-January.
The gauge fell 2. The l istless track down has curbed enthusiasm for the asset class, especially after global equities reached all-time highs. The lingering impact of Cyclone Debbie on Queensland's exports of coal will begin to ease in around a week for some exporters as work is expedited to repair the multiple rail links which shift the millions of tonnes of coal to port.
Earlier this week, miners such as BHP Billiton and Glencore declared 'force majeure' which released them from contractual supply commitments due to forces beyond their control. However, there was no change to the five-week repair schedule for the major Goonyella line t hat connects into the Dalrymple Bay and Hay Point Coal terminals, Aurizon said.
But in the face of increasing competition and declining margins , coming at a time when Telstra needs to make further investments in its network while cutting costs, analysts and fund managers are questioning whether Telstra's high dividends are sustainable. This and other challenges to Telstra's balance sheet have analysts at UBS recommending it cut the very thing that keeps it popular as an investment.
That's because, as a recent note by UBS analysts led by Eric Choi pointed out, Telstra faces long-term threats to its earnings , and could soon have to fight off the threat of a fourth mobile network.
TPG Telecom has in several public statements signalled its interest in starting a new Australian mobile network. They point to France, where, in , mobile operator Free secured a 15 per cent market share over three to four years, reducing the profits of the three major existing players.
The current Telstra share price, they added, "does not factor the future entry of a fourth mobile network ". From the end of some of the more reputable banks began restricting lending for land purchases.
The huge amount of land that had come onto the market was depressing rental yields. These low rental yields and high leverage taken on by some speculators led to cash flow problems.
The crash finally came in Land values fell to levels about one-half their boom levels. Here's more on the crash.
The All Ordinaries gold index is up a solid 3 per cent, after the precious metal's price spiked 1. The ASX has lifted about 10 points off the day's low but is still down 0. Other regional markets are also lower , including Hong Kong, down 0.
This is likely to be the case again, particularly as it's unlikely to signal increased US involvement in the war in Syria. Investors had already been on edge as Donald Trump met Chinese leader Xi Jinping for talks over flashpoints such as North Korea and China's huge trade surplus with the United States.
It was not yet clear if this strike would be the only one, though Secretary of State Rex Tillerson did say the attack was "proportionate". The yen, a favoured haven in times of stress due to Japan's position as the world's largest creditor nation, climbed across the board.
The US dollar fell to Investors also headed for the safe haven of bonds. Yields on year US Treasury debt fell five basis points to 2.
Trump may face new pressure after Syria chemical weapons attack - MarketWatch
Aussie year yields fell 9 points t o 2. Bond yields move inversely to prices.
Syria Attack: From stocks to currencies, what Trump's Syria strike did to global markets
Spo t gold prices jumped 1. Oil also caught a bid on concerns the military intervention could affect supplies from the Middle East.
A delayed fallout is manifesting itself in a steady climb in underemployment , in direct contrast to countries such as the US, Europe and the UK, which were consumed by the financial crisis. Over the last few years, the average rate of workers wanting more hours has fallen throughout those markets, according to OECD data compiled by AlphaBeta.
But Australia's u nderemployment has sharpened , as commodity prices peaked and mining investment started winding down. Problems in the labour market have become stark over the past year as full-time jobs fell, part-time roles picked up some of the slack and many people quit hunting for work. As a result, unemployment remains below 6 per cent despite a labour market that in reality has a lot more slack than that figure suggests.
The issue then is whether Australia might've done better taking its medicine earlier and getting it out the way. APRA is on the money: This did not jive with the prevailing zeitgeist, with many bank investors, analysts and executives crowing that the capital raising debate was "over".
The characteristically independent Byres did not pull his punches, noting that for all the banker talk of better risk-weighted capital ratios since the global financial crisis, r eal leverage had not, in fact, shrunk much.
Our big banks currently hold less equity capital than a first-time buyer with a 10 per cent deposit. The mirage of soaring post-GFC capital ratios was a function of Byres' predecessors' willingness to allow banks to slash their home loan risk weights , and hence artificially disappear assets, from 50 per cent before to 16 per cent in , which meant the majors could leverage their equity when lending against bricks and mortar by more than 65 times.
Because house prices never decline. Here's more at the AFR. Meanwhile, oil prices are soaring. Given rising supply, the size of inventories and the extent of the pick up in shale output, it does seem likely that price gains will be capped. More details are coming out on the US attack: A target was identified as an airbase in Homs. He said the missile strike was i n the "vital national security interest of the United States" and that he was compelled to act after more 70 men, women and children were killed by poison gas.
Trump ordered the strikes just a d ay after he pointed the finger at Assad for this week's chemical attack, which killed at least 70 people, many of them children, in the Syrian town of Khan Sheikhoun. The Syrian government has denied it was behind the attack. Trump said earlier on Thursday that "something should happen" with Assad as the White House and Pentagon studied military options.
The risks have grown worse since , when Barack Obama, Trump's predecessor, considered and then rejected ordering a cruise missile strike in response to the use of chemical weapons by Assad's loyalists.
Here's more on the SMH's live blog. The ASX has plunged 40 points in response , swiftly losing all of the day's gains. The Aussie dollar also responded, sliding about a quarter of a cent to the day's low of US Shares in The Reject Shop have plunged after the discount variety store chain warned its full-year profit will drop by almost a third. The company also warned that it may not be able to declare a final dividend in Shares in The Reject Shop are down a whopping The Reject Shop's managing director Ross Sudano blamed a tough retail environment and "execution issues" with the group's merchandising strategy for the weak sales performance.
He said the company's focus on the merchandise mix has moved too heavily towards a focus on variety products. The price tag, about 15 per cent to 30 per cent above some analysts' net asset valuations , is a feather in chairman John Thornton's cap, a former Goldman Sachs banker who has pledged closer ties with China since his appointment.
He's put a billion dollars in our pocket and he has got the Chinese as partners. What more can you ask for? He is well connected in China. The deals are finally starting to happen. The ASX is up 0. At Xi dinner, Trump jokes they had a "long discussion" and so far "I have gotten nothing, absolutely nothing". In local equities, the big banks are leading the way up after several days of selling, all rising around 0.
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3 'War Stocks' to Buy After Trump's Syria Strike | InvestorPlace
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